Gujarat Becomes India's No.1 Manufacturing Hub | How Maharashtra lost $20 billion Project ? |

Maharashtra ‘loses’ Vedanta, Foxconn to Gujarat

WHAT'S HAPPENING ?

A political firestorm erupted in Maharashtra after a joint venture of Indian mining conglomerate Vedanta and Taiwanese manufacturing giant Foxconn, which held talks with the state to set up its new semiconductor plant, Signed a Memorandum of Understanding (MoU) with Gujarat government on Tuesday to locate its project there.

The companies' talks with the Maharashtra government were 'almost final' when its senior officials met Chief Minister Eknath Shinde and deputy Chief Minister Devendra Fadnavis in July 2022.

So much so that officials from the state's Industries department said the company executives had finalised over 1,000 acres land in Talegaon Phase IV.

Now, both political and administrative bosses in Maharashtra are finding it difficult to explain what went wrong in the campaign to grab the project.

60:40 JV

Vedanta has partnered with Foxconn through a 60:40 joint venture to set up an integrated display and semiconductor fabrication ecosystem.

Foxconn is known for creating assembly units for electronic devices, including but not limited to mobile devices. One of the goals of the project is to make India self-reliant in electronics, through expansion of its presence across the value chain.

WHAT MAHARASHTRA LOST ?

The project was estimated to bring close to Rs 26,200 crore SGST, 80,000 to 1,00,000 direct and indirect job opportunities, $21 billion direct and $5-8 billion additional investment, helping the state's GDP growth.

Around 150+ companies across the value chain would have benefited, creating 70,000 to 1,00,000 direct and indirect jobs.

MAHARSHTRA GOVT'S OFFER ?

The Maharashtra government's key offer was of a capital subsidy of up to 30% for setting up the plant at Talegaon industrial area, among other incentives.

According to documents of the Industries department, the state government had offered an "extremely lucrative incentive package" as per the Electronics System Development and Maintenance and Fabrication policy of the state.

The incentive package included power tariff subsidy of Rs 1 per unit, including support to Vedanta to set up a 750 MW captive solar power generation unit.

Apart from subsidies on land, water and power charges, the Maharashtra government had also offered waiver on stamp duty as well exemption from electricity duty. The company was also offered incentives on employment generation.

WHY WAS THE MAHARASHTRA CONFIDENT ?

In the last week of July, the company delegation held a meeting with CM Shinde and his deputy Fadnavis.

Following the meeting, Maharashtra Industrial Development Corporation issued a press note, which said, "Vedanta is in active discussion with the government of Maharashtra for their proposed manufacturing facility for semiconductors and display fabs."

"With a high concentration of skilled manpower, connectivity to the port, seamless domestic supply-chain and highly developed industrial infrastructure, Talegaon in Pune has emerged as a prominent option for Vedanta and Foxconn for their $22 billion investment, that can generate more than 200,000 direct and indirect jobs."

The note further said Vedanta and Foxconn had multiple rounds of meetings with the state leadership and Vedanta conducted site visits to Talegaon in Pune and found the location to be an ideal match for their requirements.

Shinde, too, had said it was a win-win scenario as Maharashtra has the required skilled manpower and industrial and logistical infrastructure suited for a project of this scale. A proposal with regard to transfer of land was to be brought in state cabinet meeting.

SO WHY DID THE COMPANY CHOOSE GUJARAT ?

According to sources within the Maharashtra Industries department, the reason could be Gujarat's more lucrative offer on land-related incentives.

Politically, the Opposition in Maharashtra is claiming that the state government surrendered to Prime Minister Narendra Modi, who hails from Gujarat, at a time when the state is set to witness Assembly elections.

The ruling side has blamed the previous Maha Vikas Aghadi (MVA) government for not extending more incentives to the company, in comparison to Gujarat.

Gujarat has left behind Maharashtra to become the country's leading manufacturing hub, according to data from the RBI.

Gujarat saw its Gross Value Addition (GVA) in manufacturing grow by 15.9% annually between FY12 to FY20 to stand at Rs 5.11 lakh crore, data shows.

Meanwhile, Maharashtra's annual growth rate stood at nearly half of Gujarat's at 7.5% for the same time period and its GVA for manufacturing stood at Rs 4.34 lakh crore in FY20.

Next in line after Maharashtra, in terms of manufacturing, was Tamil Nadu with a GVA of Rs 3.43 lakh crore followed by Karnataka at Rs 2.1 lakh crore and Uttar Pradesh at Rs 1.87 lakh crore.

Maharashtra is still the leading provider of services in India, with the state's services GVA growing by 12.6% annually, standing at Rs 15.1 lakh crore in FY20.

INITIATIVES TAKEN BY GUJARAT

Reforms like the opening of a single window for business clearances, simplified labour norms, and the importance of incentive-linked schemes were highlighted by a KPMG report as key factors that led to Gujarat's growth. Higher investments and reforms allowed Gujarat to post double-digit growth over the time period measured.

Gujarat's capital investment in gross fixed capital formation (GFCF) between FY12 and FY19 was Rs 5.85 lakh crore, while Maharashtra's investment during the same period was Rs 4.07 crore. Andhra Pradesh saw GFCF investments of Rs. 1.49 crore.