The Hindu Business Line : LG to exit manufacturing in J&K, Assam

The company had set up facilities taking advantage of the tax benefits being offered in these States. However, due to inadequate support from the local administration, LG decided to exit.

The company currently has one facility in Baddi, Himachal Pradesh, and three in Dehradun, Uttaranchal, besides the one in Noida.

Elaborating on these manufacturing facilities, Mr Salil Kapoor said, "It would be wrong to call these units original equipment manufacturers since except investment in land, the rest of the investments are made by the company. The company would have made total investments of close to Rs 15 crore."

From these facilities the company is able to source about 80,000 units per month.

Brushing aside arguments that products from such units may suffer in quality and face logistics problems, Mr Kapoor told Business Line, "We have to maintain our brand image, hence one has to ensure that quality does not suffer. The company follows the same quality control norms that it applies to the Noida facility. Further, the manpower is LG's. In fact, these units help us in meeting timely demands for ACs during the season."

Excise, sales-tax and income-tax exemptions have been granted to industrial units in J&K, Uttranchal, Himachal Pradesh and the North-East region. A section of India Inc feels that in view of the high level of taxation, manufacturing units keep on shifting their locations based on exemptions granted to different regions from time to time.

Most of the time and resources are devoted to tax planning, with little effort on improving productivity, quality and efficiency, thereby affecting economies of scale and global competitiveness of the industry, industry sources argue.

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