Maharashtra Goes All Out to Woo Fox­conn

To sweeten deal for a man­u­fac­tur­ing fa­cil­ity, state of­fers to com­pen­sate the Tai­wanese co the 11.5% ex­cise duty levied by Cen­tre

The Economic Times - - Companies: Pursuit Of Profit -

Kr­ishna Ku­mar & Gul­veen Au­lakh

Mumbai | New Delhi: In what looks like a last-ditch at­tempt to get man­u­fac­tur­ing gi­ant Fox­conn to in­vest in Maharashtra, the state gov­ern­ment has of­fered to com­pen­sate the Tai­wanese com­pany the 11.5 % im­port duty levied by the Cen­tre.

State gov­ern­ment of­fi­cials met se­nior of­fi­cials of Fox­conn on Tues­day and have given a pro­posal that it could com­pen­sate the im­port duty im­posed by the Cen­tre ei­ther by giv­ing a grant or a sub­sidy to off­set the losses suf­fered by the com­pany if it is charged the im­port duty.

Those in the know said that the state was forced to give this as­sur­ance as Fox­conn was re­luc­tant to fund the set- ting up of a man­u­fac­tur­ing fa­cil­ity in Maharashtra, or for that mat­ter, any­where in In­dia un­less the gov­ern­ment charged im­port du­ties that were cheaper than those in China. Fox­conn was keep­ing a close eye on the in­ter-min­is­te­rial panel formed by the cen­tral gov­ern­ment af­ter Amer­i­can tech­nol­ogy com­pany Ap­ple, which also wants to man­u­fac­ture in In­dia, asked for sim­i­lar duty ex­emp­tions and tax con­ces­sions to man­u­fac­ture their prod­ucts in In­dia.

Sources in the Maharashtra gov­ern­ment said that if the in­ter-min­is­te­rial group heeded to Ap­ple’s con­cerns and waived off the duty and of­fered tax ex­emp­tions, then even Fox­conn would have ben­e­fit­ted. But since noth­ing much has hap­pened on the front, Maharashtra has taken the ini­tia­tive by of­fer­ing to com­pen­sate Fox­conn for the 11.5% im­port duty levied on it.

How­ever, there are ques­tions as to whether Maharashtra can give such con­ces­sions un­der GST. “From a man­u­fac­tur­ing point of view, the rev­enue gen­er­ated can be in­cen­tivised to state GST, but only for the prod­ucts con­sumed within the state. If they think that man­u­fac­tur­ing ac­tiv­ity is gen­er­at­ing em­ploy­ment op­por­tu­nity and other ben­e­fits to the state, they can of­fer other in­cen­tives, but for that they will have to dip into their own pock­ets,” said Bipin Sapra, an in­di­rect tax ex­pert at con­sult­ing firm EY.

This is Maharashtra gov­ern­ment’s lat­est at­tempt to get the elec­tron­ics man­u­fac­turer to in­vest in the state. A year back, Maharashtra Chief Min­is­ter Deven­dra Fad­navis be­came the talk­ing point af­ter he man­aged to get the Tai­wan firm to com­mit an in­vest­ment of $5 bil­lion in the state to set up a man­u­fac­tur­ing fa­cil­ity.

How­ever, Fox­conn did not fol­low it up, and the state gov­ern­ment kept on writ­ing to the com­pany, ask­ing it to state its pre­cise re­quire­ment for land. Fox­conn did not re­vert say­ing it won’t be able to com­mit its in­vest­ment un­til it had enough clar­ity on the is­sue of im­port du­ties. The Cen­tre and the Maharashtra gov­ern­ment have faced a lot of flak from the Op­po­si­tion par­ties af­ter the Fox­conn deal did not ma­te­ri­alise.

Cen­tre and the Maharashtra gov­ern­ment faced a lot of flak from the Op­po­si­tion par­ties af­ter the Fox­conn deal did not ma­te­ri­alise

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