Bihar Wood Based Industries Investment Promotion Policy, 2020 (BWBI – IPP2020)

Some of the Important Points from the Policy

To encourage and promote wood based industries and artisans in Bihar through technology upgradation, waste reduction, value addition, storage, skill upgradation and export promotion thereby generating higher income returns to entrepreneurs and farmers, skill upgradation of artisans and creating more employment opportunities, a resolution has been declared by Bihar Govt under the guidance of MoEFCC on 26.08.2023.

The Government of Bihar is investing heavily in the plantation schemes to improve the green cover in the State of Bihar, and bring the green cover to 17%. A systematic drive has been undertaken to improve the overall tree cover and timber availability in and outside the forest by giving a supply side push to the afforestation program.

Further, to provide incentive to the farmers to grow more trees on their farmland, it is important that they get a better price of their tree crop-timber. This can be achieved by creating the demand side pull, which is possible by promoting the efficient and integrated wood based industry, which buys the tree crop at a competitive price, and the farmers are encouraged to grow and protect the tree on their farmland.

The technology penetration in the wood base industry is not upto the standards. Further inefficient plant and machinery results in low quality of value added product and more wastage of raw material, lack of integrated units result in inefficient business model.

The bank does not support the investment project proposals as it is mostly in the unorganized sector and were also not covered under the priority sector of Bihar Industrial Investment Promotion Policy.

This policy will help to bring in investment and a positive business ecosystem to improve the existing saw mills, veneer and plywood units as well as furniture units. The support shall be in Expansion / diversification/ modernization/technology upgradation / adding furniture making unit, value addition in existing Industry/ Unit and hence improving synergy.

The policy aims to support the new wood based industry to set up integrated units for improving overall efficiency and integration. In addition, the policy envisages to support the existing small Furniture and other modern artifacts making units in the unorganized sector and artisans. This sector has immense scope for the Job creation for the skilled and semi skilled labor.

Finally, the support provided under BWBI-IPP, 2020 will help the citizens in getting good quality wood products and the farmers to realize a better price of their produce and thereby help to maintain the tree crop longer on their farmland, and induce them to plant more and more trees.

3.9. “Project Cost”, for the purpose of calculation of subsidy shall mean and include the cost of plants and machinery, cost of civil construction, cost of land value and working capital,

Provided that the working capital for this purpose of calculating project cost for the subsidy shall be maximum of 20% of the projected annual turnover,

Provided that in the project cost considered for incentive calculation under this policy, the cost of land shall not exceed a limit of 10% of the total proposed investment other than the land. Thus in the approved project cost either the actual cost of land mentioned in the project report or 10% of the total proposed investment excluding the land, whichever is less, will be considered,

Provided that Land value shall be taken as the MVR of the area or the cost of the land of industrial area, as the case may be,

Provided that the department shall prepare an indicative unit cost for tools, plants and machinery for the purpose of evaluating project cost.

Important (Summarized) points of the policy

4.3. Subsidy under this policy shall be allowed only:

a) For technology upgradation of existing tools, plants and Machinery of the existing wood based industrial units in the state.
b) In case of expansion of existing units where the existing capacity of the said unit is enhanced by at least 25% by way of such expansion or modernization.
c) In case of diversification of an existing unit where the project cost of the diversified unit should be at least Rs 10 lakhs in plants, machinery and civil construction for a new product line/ activity.
d) For setting up of new wood based industries in the state.
5.1.2 This policy shall come into force from the date of its notification. The said date shall be considered as effective date of this policy from which its provisions coming into force and will be applicable till 31st March 2025. Eligible units under the policy shall avail the subsidies upto a maximum of 2 yrs after the end of the policy term, i.e. 31st March 2025.
5.1.8 The benefits under this policy shall cease either on the exhaustion of the applicable quantum or on the completion of the eligible period, whichever is earlier. Any unutilized incentive at the end of eligibility period shall lapse.
5.1.9 The time schedule for completion and operationalization of project will be a maximum of 24 months from the date of approval.

5.2.1 Subsidy
a) Subsidy shall be made available to the investors as per the following details:

7.2. Eligibility
7.2.1. The applicant should have a sound financial background. The net worth of the applicant(s) should not be less than the subsidy amount sought.
7.2.2. The land for the project, if any shall be arranged by the applicant either by purchase or on lease of at least 30 years and it should be registered in the name of the proposing unit.