Tata Motors to wheel out from UP to Uttarakhand LUCKNOW: More than a month after Indian Industries Association (IIA) members along with Tata Motors representatives got assurance from the Infrastructure and Industrial Development Commissioner that their demand for providing incentive to the company for expansion under the Industrial Investment Policy -2006 would soon be considered, the Samajwadi Party government remains non-committal on the disbursement of benefit to industries till date. Some IIA members who are also vendors of Tata Motors, Indias leading commercial vehicle manufacturer, met on Saturday to inform that the company has decided to shift major part of its production facility from Chinhat near the state capital of UP to Rudrapur, Uttarakhand from February because of governments inadequacy to provide them incentives in spite of several pleas. An official from Tata Motors confirmed the news that the company had decided to shift production of one of its vehicle models to Uttarakhand as the state offers good tax exemptions. It is a conscious business decision to move to a place which can help in cost cutting during production exercise. We would gradually shift production our other models also to places which offers good incentives, he added. The company manufactures around 18 models of buses and trucks at Chinhat manufacturing plant. The move will affect livelihood of more than 4,000 personnel employed directly with Tata Motors and about 2,000 employees working for vendors associated with the company. There are about 40 MSME (micro/small/medium enterprises) vendors supplying parts to buses and trucks manufactured at Chinhat plant. Lives of about 60,000 employed indirectly with the companys daily operations would also be hit. Tata Motors is demanding 20% capital investment subsidy and sales tax deferment scheme offered by SP chief Mulayam Singh Yadav in 2006. Under the deferment scheme, company was allowed use the tax for capital investment for up to 7 years and pay it from the 10th to 17th year. Tata Motors had made huge investments as an outcome of this policy. But the policy was discontinued in Mayawatis regime. When SP government came back to power, MSME industries and representatives of Tata Motors pleaded to honour the policy again but the government remained non-committal. Since the company has a plant in Uttarakhand already and it enjoys tax exemptions from the government, it has made up its mind to shift majority production there. MSME association, IIA said the company has started working on the plan and would commence its full fledged production in Uttarakhand from April onwards. The shift of production would result in around Rs 500 crore-loss to the states exchequer apart from affecting 65,000 lives. Prashant Bhatia, divisional chairman, IIA said, We met the infrastructure and industrial development commissioner (IIDC) Alok Ranjan along with Tata Motors representatives on December 5. We had requested the government to extend the policy and IIDC has assured that government would take a positive step in this direction. We were told the proposal has been sent to Group of Ministers who would approve it and send it for cabinet approval. The cabinet meeting is expected around January-end and we hope to receive some good news from the state government. But, if they are still evaluating options, Tata Motors would gradually move entire production to Uttarakhand. Besides revenue loss, it would be a great loss of governments reputation too, said Punit Arora, senior vice-chairman, IIA Lucknow. Tata Motors has invested close to Rs 1,100 crore on plant while the MSME vendors have made about Rs 250 crore investments. If the production shifts to Uttarakhand, vendors would annually lose revenue worth Rs 500 crore. This action will prove to be a major blow to the efforts of state government to boost industrialisation in UP, as it would discourage companies in future to invest in the state.
Posted on: Sun, 26 Jan 2014 06:27:50 +0000