Bihar government has approved a proposal for amending the Industrial Promotion Policy 2006 to extend post-production capital subsidy on plants and machinery for new units in the state, official sources said on Thursday.

The state cabinet meeting presided over by Chief Minister Nitish Kumar gave its nod to the proposal on Wednesday.

The proposal would encourage investments and stipulate a capital subsidy of 20 per cent on plants and machinery for small units to a maximum limit of Rs 35 lakh.

Medium and big industries would now be entitled to a capital subsidy on the amount spent on plant and machinery upto 10 per cent with a maximum limit of Rs one crore, the sources said.