Bengal to Scrap Old Industrial Incentives, Eyes Modern Approach

The West Bengal government’s new Act aims to revoke, rescind, and discontinue all existing industrial incentive schemes and related obligations with retrospective effect from their respective dates of implementation.

Published in the Kolkata Gazette on April 2, 2025, the Revocation of West Bengal Incentive Schemes and Obligations in the Nature of Grants and Incentives Act, 2025, seeks to reallocate state funds from financial incentives to social welfare schemes, prioritising the needs of the marginalised. Further, the Statement of Objects and Reasons cites the limited industrial impact, disproportionate benefits to a few enterprises, financial strain on the state exchequer, and failure of many beneficiary units as reasons to discontinue the schemes.

Here are some of the key features of the new Act:

• Entitlement to incentive-related claims disallowed: The Act applies to all industrial units that were eligible under the incentive schemes, and explicitly disallows any entitlement to past, present, or future claims related to incentives, benefits, support, exemptions, tax remissions, or any other form of industrial assistance previously promised or sanctioned under the West Bengal Incentive Schemes.
• Retrospective revocation of schemes: All schemes listed in the Schedule are to be retrospectively revoked from their respective dates of implementation. The Schedule encompasses all industrial incentive schemes from 1993 through 2021, including the West Bengal Incentive Schemes of 1993, 1999, 2000, 2004, 2008, 2015, and 2021; the West Bengal State Support for Industries Schemes of 2008 and 2013; and the West Bengal Incentive to Power Intensive Industries Scheme of 2005.
• Cessation of government liability: The state government and its authorised agents will have no remaining liabilities under such schemes or grants.
• Abatement of suits: All claims, suits, legal proceedings, arbitral awards, or directions by courts, tribunals, or authorities for the enforcement or recovery of such incentives will be deemed void and stand abated with immediate effect.
• Power to recover excess amounts: The Act empowers the state government to recover any amounts disbursed in excess of entitlement under any of the revoked schemes as arrears of land revenue.

The state government is reportedly adopting a modern approach to encourage the setting up of industrial units, in light of ongoing advancements in AI technology and the emergence of new industrial strategies. A committee headed by the Chief Secretary has been constituted to submit its recommendations within a month, based on which the new scheme will be designed.