Courting capital

  • General Motors' plant at Talegaon. The company plans to expand its capacity with an investment of $1 billion by 2020 | AP
  • Back in the game
    Back in the game: Fadnavis after signing an MoU with Foxconn Technology Group that plans to invest $5 billion over five years.

Efforts to make Maharashtra investor-friendly pay off

When Maharashtra Chief Minister Devendra Fadnavis and Industries Minister Subhash Desai visited Mercedes-Benz's plant at Stuttgart in Germany on April 13, a complaint awaited Desai there. He was told that the environmental clearance for the company's Chakan plant was pending. Desai immediately got in touch with the ministry officials and the secretariat. He was informed that the clearance could be issued immediately. By April 15, the document reached Desai via email and it was “printed, laminated and handed over” to the company's managing director, who was visibly taken aback. “They said, 'Even we Germans could not have done it so fast',” said Desai, before breaking into a chuckle.

The incident symbolises a larger shift in the way Maharashtra has decided to approach industry. The BJP-Shiv Sena government has made the ease of doing business in the state its priority. According to Desai, the government has reduced the number of permissions required to set up industry from 76 to 37 and intends to bring it down further to 25. It has removed the mandatory clearance required for industrial plots exceeding 20,000 metres and reduced the time taken to set up a power connection from 161 days to 15 days. The efforts have resulted in an expression of interest from 18 companies since January, with a cumulative commitment worth Rs60,000 crore.

The current dispensation is more proactive than its predecessor, the Congress-NCP government, in attracting industry even though officials are reluctant to acknowledge it openly. “Governments are always keen to attract investment, but yes, because of the ease of doing business, the focus has been a lot more on attracting investments,” said Apurva Chandra, state industry secretary. “Now, we are interacting with many other departments such as environment, energy and the pollution control board, and looking into each and every kind of permission and clearance that may be required.”

According to Bhushan Gagrani, chief executive officer of Maharashtra Industrial Development Corporation, what makes this government different is its approach to industrial development rather than the policy itself, which was drafted in 2013. “The difference is that the chief minister is taking a personal interest in attracting investments,” he said.

With three major foreign investment deals landing in its kitty in a matter of weeks, Maharashtra, which was steadily losing its sheen as an investment destination, has staged a stellar comeback. Taiwanese smartphone manufacturer Foxconn Technology Group, whose client list includes Apple Inc and Xiaomi Inc, signed a memorandum of understanding to invest $5 billion in the state over five years. General Motors India said it would expand capacity at its existing plant in Talegaon with an investment of $1 billion by 2020. The company expects to double its production to 2,20,000 vehicles by 2025. Interestingly, GM India also announced the closure of its production unit at Halol in Gujarat, which had trounced Maharashtra to become an investor favourite in recent years.

The third deal involves a joint venture of South Korean miner Posco and Shree Uttam Steel, a subsidiary of the Miglani family-owned Uttam Galva group, which will invest $3 billion to set up a steel plant at Satarda in Sindhudurg.

The Foxconn deal was the result of an active wooing by the government. Things started rolling in March this year, said Gagrani, when some sources and the Central government informed MIDC that Foxconn was interested in setting up fabrication and electronics manufacturing in India. The subject was brought up before Fadnavis. “Just because we insisted, Fadnavis decided to go to China to meet the Foxconn people,” said Gagrani.

Then, the Foxconn chairman visited Mumbai. He was shown all the possible sites. “What impressed them was the keenness of the state, facilities, infrastructure, combination of software and hardware industries, which is uniquely available in Maharashtra,” said Chandra, who believes that the presence of a sizeable land bank is helping the state significantly at a time when the Central government is struggling to make amendments to the controversial land acquisition bill.

“In terms of logistics, there are a lot of factors that contribute to a very favourable business environment, including proximity to the ports, a skilled and educated workforce and, most importantly, a pro-business approach of the state government,” said P. Balendran, vice president, GM India.

The most tangible impact of the new investments would be on employment. By Desai's account, more than a lakh people would gain employment as funds for the 18 promised investments start pouring in.

“The recent push by the state governments to enhance their own attractiveness for investment means that Maharashtra needs to continuously work on making itself the chosen destination for foreign investments,” said Anis Chakravarty, senior director at Deloitte in India. “Some basic steps that could help it maintain its lead are correcting the anomalies in the existing land acquisition laws, pruning procedures for getting permits and digitising existing process on land registration and property tax payments while creating an online system for tendering to bring in transparency. Along with these, additional focus on upgrading and creating physical infrastructure would ensure that the state rids itself of the supply side constraints.” He also stressed the need to further develop Mumbai as a financial centre connected to other parts of the state and the introduction of newer financial products.

Currently, much of the investment is concentrated in the Pune-Mumbai-Nashik stretch, leaving the less affluent parts of the state high and dry. Desai, however, disagreed. Aurangabad is being developed as part of the Delhi-Mumbai Industrial Corridor, and MIHAN (business hub) near Nagpur airport is shaping up well, he said. While the government still has some way to go, for the time being at least, Maharashtra seems to have got its mojo back.

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The Week

Topics : #Maharashtra | #business

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