Madhya Pradesh State Policies

Industrial Promotion Policy 2010 (As Amended In 2012)

Dept of Commerce, Industry & Employment, Govt of  Madhya Pradesh

As a policy initiative by Madhya Pradesh Government to attract investment and further boost the pace of industrial investment after established industrial houses and prospective investors showed interest for investment in the state, the state government revised the existing Industrial Policy of 2010. The industrial policy will be effective for a period of five years with effect from1st November 2010. However, the amendments will be applicable to the units commencing production from 28th August, 2012 till the expiry of existing policy i.e. 31st October, 2015.

The policy pays special attention on promotion of small and medium enterprises to avert the adverse impact of global recession on industrialization in the state. Industrial infrastructure in the state will be upgraded and a Land Bank will be created. Efforts would be made to simplify the land allotment process to the investment projects.

Also, Agri business and food processing, textiles, automotive and auto components, tourism, pharmaceutical, bio-technology, IT/ITES, healthcare, skill development and logistics & warehousing have been placed under focus sector.

Major Highlights of the Policy :

  • It makes it mandatory for upcoming industries to reserve 50 per cent direct job to locals.
  • A special zone for labourers will be created to avoid creation of slums in upcoming industrial areas.
  • 50 per cent concession on diversion of land for those industries that will privately acquire land.
  • A special package for non-resident Indians for foreign direct investment provided they ensure Rs 25 crore or more investment.
  • To include the destitute and handicapped to available benefits like interest grant (maximum Rs 25 lakh) on investment.
  • Appointment of investment relationship managers for prompt implementation of investment proposals, network/hardware/software for transparent administration and online implementation of schemes.

Incentives Quantified :

  • Entry Tax exemption upto 9 years
  • Value Added tax (VAT) refund for upto 10 years – limited to 100% of capital investment
  • Subsidy of 15% on fixed capital investment for micro and small scale industry
  • Land Subsidy for mega projects – 75% (on prescribed premium)
  • Interest subsidy of 5% for a period of 7 years with a limit of INR 2 million (USD 40,000) for micro and small scale industry
  • Financial Assistance of 15% on infrastructure development cost on establishment of industrial parks with a limit INR 50 million (USD 1 million)
  • Special package of fiscal incentives for projects with an investment above or equal to INR 200,000 million (USD 4 billion)
  • Provision of customised package of fiscal incentives for projects with an investment more than INR 250 million (USD 5 million)

Constitutional Hurdles:

The policy has abolished export tax charged presently by local bodies, abolition of dual taxation system (taxes levied by local industrial department arms and local administrative bodies). However, this provision requires constitutional revision as 74th amendment does not grant powers for state to strip local bodies’ power to levy taxes.

State Govt : “For this, necessary amendments will be made in concerning Acts by the Urban Administration & Development Department. The Finance Department will make available adequate funds to the Urban Administration & Development Department to reimburse entry tax to local bodies. The compensation amount will be limited to the quantum of entry tax being realised by local bodies presently.”

“In the amended policy, provisions have also been incorporated for making necessary amendments in the Act for abolishing export tax, declaring new industrial areas as industrial townships, making positive revision of the list of present ineligible industries in the context of present industrial scenario and abolition of energy development cess if power generated by captive power plant is consumed by unit itself.”

Click here to read complete Industrial Promotion Policy 2010 (As Amended In 2012)


IT Investment Policy 2012

This policy aims to develop IT/ITES/EHM as a vibrant industry for inclusive growth and creating employment opportunities for people in the state in the area of Information Technology.

The State Government is committed for overall development of IT industry in the state with specialized focus on Indore, Gwalior, Bhopal and Jabalpur for the development and promotion of IT investment. A comprehensive action plan has been formulated by the state government to achieve this including the EHM (Electronic Hardware Manufacturing) sector being taken into the ambit of IT industry, state facilitating appropriate land for the investment etc.
Following are the main incentives announced in this policy:

  • 75% Rebate on cost of land for units being established on government land with provision of up to 99 year lease
  • Exemption from the stamp duty, registration fee and entry tax for IT units and Electronic Hardware Manufacturing (EHM) units
  • Up to 50% Reimbursement of cost of skill gap training to Engineers/IT/ITeS professionals subject to maximum of INR 10,000 (USD 200) per employee
  • Exemptions on existing Floor Area Ratio (FAR) for the IT investment area on case to case basis
  • IT industry will be provided 24X7 power supply through a dedicated feeder.
  • Exemptions from provisions of Labour Law and other statutory regulations
  • Self Certification of registers and forms under various statutory acts and regulations

The above incentives are in addition to the applicable incentives as laid down under the Industrial Promotion Policy – 2010 (amended in 2012).

Read Full IT Investment Policy


Policy For Implementation Of Solar Power Based Projects In Madhya Pradesh, 2012

The Government of Madhya Pradesh has unveiled its policy for implementation of Solar Power based projects, 2012 with a focus to incentivise investment that promotes usage of solar energy.

The current energy requirement of the state of Madhya Pradesh is heavily dependent on conventional energy sources. The Government of Madhya Pradesh (GoMP) acknowledges the increasing concern related to climate change, global warming and has recognised the urgent need to address these issues. The promotion of Renewable Energy is one of the key measures taken by the GoMP in this direction.

GoMP had earlier issued the Incentive Policy for encouraging generation of power in Madhya Pradesh through Non conventional Energy Sources in 2006. This Policy period got over in October 2011. Considering the huge untapped potential of solar energy in Madhya Pradesh, the need for a revised Investor/Developer friendly policy was being felt. By inclusion of all aspects of necessities of solar power sector, this policy has been formulated in which present statutory status of power generation and distribution as well as regulatory frame work has been considered.

The objectives of the Policy:

  •  To encourage participation of Private Sector to set up Solar Power based projects in the State.
  •  To define the incentives and benefits to be provided to the participants of the Private Sector in clear terms.
  •  To build a favourable atmosphere for setting up Solar Power projects.
  •  To lay down framework for policy implementation.


  • Electricity duty & Cess exemption: Exemption for 10 years
  • Wheeling charges: A grant of 4% in terms of energy injected for wheeling by the state Govt and the rest by the  project developer, if any.
  • Banking: Conditional banking of 100% of energy in every financial year
  • Third party sale: Allowed within or outside the state
  • Industry status: Eligible for benefits under Industrial Promotion Policy. In case of conflict between the two policies, provisions of Solar Policy will prevail
  • Entry tax /VAT Exemption: The equipments purchased for installation of Solar power plants exempt

Read Full Text of The Solar Policy For Implementation Of Solar Power Based Projects In Madhya Pradesh, 2012 

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