The Hindu Business Line : Maharashtra continues to lure auto majors

After signing three major MoUs with vehicle makers Tata Motors, Mahindra & Mahindra and Fiat India Automobiles last week involving ramping up production capacities, the Maharashtra Government is now close to sealing another major investment in the automobile sector.

Speaking to Business Line on his last day at office in Mantralaya, Mr. V.K. Jairath, Mahrashtra’s Industries Secretary, dropped clear indications of another MoU with an automobile major in the pipeline. Refusing to disclose the name of the vehicle maker, he said “You will come to hear of it in the next 20 days.”

Stating that Maharashtra has for long been a potential investment ground for the manufacturing sector, Mr Jairath said the Government expected to shore up vehicle production in the State to about 1.5 million units in the next three years through MoUs with global players in this sector. Since the last three years, the State Government has signed MoUs for 95 mega projects, covering the entire manufacturing space involving an investment of Rs 1,19,000 crore, out of which the automobile sector accounts for an investment slice of between Rs 30,000 and Rs 35,000 crore.

The first to set up shop in the State after the Government launched its mega project policy was the Mahindra-Renault joint venture to produce Logan. “We concluded the MoU in September 2005 and the joint venture could roll out its cars in April 2007,” he pointed out, adding that negotiations with the joint JV was tough as it was promised big fiscal incentives by Uttaranchal, which were supported by the Government of India.

Global majors such as General Motors, Fiat, Daimler AG, Volkswagen, International Trucks and Skoda have been attracted to the State. The Government has been able to attract global players with their customized package of incentives. “We design different packages for different projects. There is a mix of fiscal and non-fiscal incentives, like availability of infrastructure and skilled manpower,” according to the senior bureaucrat.

A study has shown that the State’s workforce in the manufacturing sector produces 37 per cent more goods and put in 51 per cent more value addition, as compared to the industry standards elsewhere, he said. “We studied other mega project policy of other States, understood our lacunas and strengths and formed our own mega project policy. Our approach was very clear – “Cut the red tape and roll the red carpet for investors” he added.

“For example, we gave clearance to a Siemens project in 28 days, which led the company relocating the project to Maharashtra from China”, he pointed out.

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