CHANDIGARH: With less than a year left for the Assembly elections, the Punjab Cabinet on Saturday approved the Punjab Industrial and Business Development Policy, 2026, setting a target to attract Rs 75,000 crore in investments this year by offering a mix of fiscal and non fiscal incentives to companies setting up new industrial units in the state.
For the first time, under the new policy, investors will have the liberty to choose from 20 different incentive options to build their own customised incentive package.
A fixed capital subsidy of Rs 20 crore for setting up Zero Liquid Discharge systems and Rs 7.50 crore for switching to paddy straw based boilers has also been introduced.
The policy, supported by 24 sector specific policies developed after consultations with stakeholders across these sectors, will apply not only to new investors but also to those undertaking modernisation and expansion of their existing units.
Punjab Chief Minister Bhagwant Singh Mann unveiled the policy, asserting that his government is determined to make Punjab the No. 1 investment destination in the country through bold reforms and a flexible incentive framework designed around the needs of industry.
He said the Punjab government has fundamentally restructured its industrial policy to accelerate industrial growth, attract large scale investment and generate employment across the state.
Mann said the new policy allows investors to choose up to 20 incentives and design customised packages suited to their business models.
It also introduces capital subsidy for the first time in Punjab, offers incentives of up to 100 per cent of Fixed Capital Investment and reduces Employment Generation Subsidy eligibility to Rs 25 crore investment and 50 workers.
He said this would open industrial incentives to a much wider base of businesses while strengthening Punjab’s position as a leading destination for manufacturing, services and emerging technology sectors.
Addressing the gathering, Mann said the policy represents a major shift in the way industrial incentives are structured in Punjab.
“Every other state in India hands investors a fixed menu and says take it or leave it, but Punjab has changed that. Now an investor can pick up to 20 incentives and build a package around their own business model.”
Explaining the rationale behind the approach, Mann said different industries have different operational realities and cost structures.
“Pharmaceutical companies need different support than an EV manufacturer, a data centre has different costs than a textile plant. The new policy acknowledges that and builds around it.”
He said the framework allows investors to optimise incentives according to their sector, cost structure and scale of operations.
“The incentive package can be optimised for their specific cost structure, their specific sector and their specific scale. That is money on the table that wasn’t there before.”
Highlighting another major feature of the policy, Mann said that for the first time in Punjab’s history the government has introduced a capital subsidy.
“If someone is planning a Rs 100 crore plant, without capital subsidy Rs 100 crore is their risk. With capital subsidy, the government co invests a portion upfront and their capital at risk drops.”
He said this significantly improves investment economics. “This means the same revenue with lower investment. Punjab is the first state in the country to offer that.”
Mann also said the policy provides long term stability to investors through an extended incentive period. “Incentive support has been extended up to 15 years whereas most state policies run five to 10 years.”
He said the provision is particularly important for capital intensive sectors. “This is a big boon for heavy industry, semiconductors, pharmaceuticals, data centres and others as these are not businesses that return profit in year two but they are decade long commitments.”
Mann noted that the policy also focuses on making industrial incentives more accessible to smaller businesses.
“Employment Generation Subsidy eligibility has been reduced to Rs 25 crore investment and 50 workers.”
He said earlier thresholds excluded many small and medium enterprises. “Previously the threshold was higher, keeping many small and medium businesses outside the subsidy framework.”
Emphasising the importance of smaller industries to Punjab’s economy, he said, “Punjab’s industrial backbone is not only large plants. It is the thousands of small manufacturers in Ludhiana, Jalandhar, Batala and Gobindgarh who employ 30, 40 or 50 people on thin margins. By bringing them inside the EGS framework, we are putting real money into the businesses that employ the most workers per rupee of investment.”
Mann said the policy also promotes inclusive employment practices. “Punjab has made inclusion a financial decision, not just a social one by ensuring higher Employment Generation Subsidy for businesses employing women, SC/ST and Persons with Disabilities workers and for IT/ITeS and GCC units.”
He further said that the government has introduced additional incentives to promote industrialisation in regions that require greater investment.
“Twenty five per cent additional incentives have been provided for nine thrust sectors and for industries located in border and Kandi areas.”
He added that under the policy investors can avail incentives of up to 100 per cent of their Fixed Capital Investment, including land, machinery, buildings, R&D and ETP.
“The policy is designed so that the Punjab government’s growth and the investor’s return move together.”