It is a double whammy for Punjab as after pharma units that migrated to Himachal Pradesh to avail off special concessions and textile units that moved to Madhya Pradesh,it is the turn of cycle industry that is shifting to Bihar now!
Punjab manufactures as much as 90% of countrys total cycles. Big players in cycle industry are moving out to Bihar from Punjab to avail off host of benefits offered by the Bihar government which has requisitioned 12 lakh cycles from manufacturers for the current year itself.
Munjals famous Hero Cycles having manufacturing facilities in Ludhiana,the industrial hub of Punjab has been approached by the Bihar government. Not only Hero Group,the other major player Avon Cycles too has been offered land and other facilities to set up unit at Hazipur or Muzafarpur in Bihar. Nova Cycles and some other smaller units too have been tipped by the Bihar government to move to that state.
The move comes at a time when exporters and manufacturers of bicycle were demanding rollback of excise duty on local manufacturers and also pitching for imposition of anti-dumping duty on cycles imported from China.
There are about 4,500 bicycle manufacturing units in Punjab. The cycle industry has been raising a demand to impose a 35% anti-dumping duty on cycle parts imported from China saying that the measure was necessary to offset the indirect subsidy that China offers to its industry by way of a fixed exchange rate.
DS Chawla,president of United Cycle Manufacturers and Parts Association told FE that it was ironic that that as against a cycle manufactured by domestic unit costing R1,000 a Chinese cycle costs not more than R700.
Cycle manufacturers say that the Bihar chief ministers Balik-Balika Yozana for which the state needs 12 lakh cycles for the current year itself was also serving as a stimulus to cycle manufactures to move to Bihar state. Managing director of Nova Cycles,HM Pahwa said that Nova Cycles was seriously considering the proposal to set up unit in Bihar as incentives are mouth watering.
The move may indeed prove to be double whammy for Punjab government which has already been rattled by Punjabs top textile units setting up new plants in Madhya Pradesh where cheap land availability and host of incentives have lured many units.
The R3,500-crore Vardhman Group,one of the largest integrated textile players in the country has already acquired 700 acres land in Madhya Pradesh and would pump in R2,500 crore in that state. Another big company,Punjabs Abhishek Industries,a flagship company of the Trident Group has purchased about 1,000 acres land in Madhya Pradesh where it plans to invest R3000 crore.
Trident Group managing director ,Rajinder Gupta confirmed to FE that availability of good quality cotton,cheap labour,uninterrupted power and a pan India market were the factors behind textile units shifting to Madhya Pradesh.
He disclosed that the company has already commenced commercial production of its two yarn spinning units in Madhya Pradesh while two more units would roll out during 2011 and 2012. The first unit at Budni in Madhya Pradesh has 50,400 spindles with the production capacity of 7,098 million tonne yarn while the second unit has 50,400 spindles.
The Trident Group R3,000 crore Ludhiana based Nahar Group having interests in spinning,knitting,weaving,processing,hosiery and garments has also acquired 200 acres land in Madhya Pradesh to set up facilities in textiles.
Several pharma units from Punjab including some big names like Ind-Swift,Venus Remedies and Nectar Lifesciences have already moved to Himachal Pradesh which offered tax holiday for 10 years to new units. Punjab chief minister,Parkash Singh Badal had himself admitted that about R4,000 crore investment had actually gone out from Punjab to Himachal in view of shifting of pharma units.
While Punjab is still pressing Centre to allow it level playing field by extending concessions to the state,the move by cycle industry to Bihar state would surely ring alarm bells in the state as more than 4,500 cycle units in Punjab produce 50,000 cycles a day,provide direct employment to over 25 lakh people directly and indirectly.