The incentives provided by the Government for industries in backward and hilly areas are:

● The government provides land for the setting up of industries. Some of the states might offer an exemption of rent in the initial years or payment in the form of installment. Some of the states even of lands at a concessional rate. The terms and conditions vary from state to state.

● Power is supplied at a concessional rate of 50% then the original price. Some of the states even give exemption of the payment of the power received.

● Industries are exempted from sales tax in all the union territories. Some of the states have exempted them for 5 years.

● Water is supplied at a no-profit no-loss basis ar at a 50% concession or with a complete exemption for the initial years.

● The industries established in the backward areas for hilly areas receive the preferential treatment in the allotment of scarce raw materials such as iron and cement.

● Octroi has been abolished in almost all the states. Loans are offered at a lower rate.

● Finance subsidy is given for building capital Assets of 10% to 15%.

● Some of these States encourage the setting up of industries in the backward areas. These Industries received a tax holiday of 5 to 10 years.