Gujarat’s Forthcoming Industrial Policy: A Significant Shift in Incentives

Expansion of Thrust Sectors

The Gujarat government is preparing to unveil a new industrial policy that will mark a major shift in its approach to investment promotion. New-age industries such as semiconductor ancillary units, robotics and drone manufacturing, and nuclear power equipment production are set to be included as “thrust sectors.” In addition, sports goods manufacturing, toy production, blue economy activities, footwear and leather, vehicle scrapping, and recycling of electronic and textile waste are also proposed for inclusion.

Return of Capital Subsidy

In a significant departure from recent practice, the policy is expected to reintroduce capital subsidy for large industries after a long gap. Currently limited to micro units, subsidies may now extend to larger projects, with incentives of up to 20% of eligible fixed capital investment. Higher benefits are proposed for projects located in underdeveloped talukas, aligning Gujarat’s incentive structure with peer states to remain competitive in attracting investments.

Boost to Strategic and Mega Investments

The draft policy outlines customised incentive packages for companies investing more than ₹2,500 crore or operating in strategically important sectors. Approvals will be granted by a high-powered committee chaired by the state’s chief secretary, ensuring flexibility and responsiveness to large-scale projects.

Relaxation in Employment Norms

The forthcoming aerospace and defence policy is in its final stages and incorporates a major relaxation in local employment norms. The mandatory requirement for Gujarat-domiciled workers is proposed to be reduced from 85% to 50%, addressing long-standing industry concerns about workforce availability.

Stronger Support for MSMEs

Recognising MSMEs as the backbone of Gujarat’s economy, the policy promises enhanced incentives to strengthen their role in employment generation and industrial growth.

Industry Perspective

Industry associations have welcomed the proposed changes, noting that Gujarat’s manufacturing ecosystem is strong but requires competitive incentives to attract new investments. The reintroduction of capital subsidy is seen as a crucial step in maintaining Gujarat’s edge as a national manufacturing powerhouse.