7 min readMumbaiSep 15, 2022 08:16 AM IST
First published on: Sep 14, 2022 at 11:56 AM IST
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.
First, what is Vedanta-Foxconn’s project?
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.
The JV was in an advanced stage of discussion with the Maharashtra government to set up the $22 billion (around Rs 1.54 lakh crore) project in the state.
How would the project have benefitted Maharashtra’s economy?
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.
What was the Maharashtra government’s offer to the company?
The Maharashtra government’s key offer was of a capital subsidy of up to 30 per cent for setting up the plant at Talegaon industrial area, among other incentives. According to documents of the Industries department available with The Indian Express, 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.
Which were the other states in competition, and was Maharashtra aware about Gujarat’s site for the project?
Tamil Nadu, Telangana, Karnataka and Gujarat were other states in competition to grab the project. Maharashtra’s Industries department had done a detailed study on site comparison between Gujarat’s Dholera and Maharashtra’s Talegaon. The department document mentioned that Gujarat has relatively lesser availability of skilled manpower. “Currently, no supply chain vendors and customers present near site. Negligible electronics manufacturing ecosystem in the state,” it said about Gujarat site.
It further said that the land parcel at Dholera site is non-contiguous, barren and marshy which requires significant infrastructure and civil works.
Mentioning that Talegaon land parcel was contiguous, it said that the Talegaon Phase IV is planned as an electronics city with total area of 10,000 acres.
The note has also listed proximity of Talegaon to Pune and easy access to facilities offered in an urban area which is absent at the Dholera site. The department note mentioned that two site visits of company officials were held at Talegaon Phase IV along with “several rounds of detailed discussion and sharing key documentation”.
Why was Maharashtra confident on getting the project?
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 then, why did the company choose Gujarat over Maharashtra?
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.
The importance of the project for Gujarat can be gauged from PM Modi’s tweet, in which he said, “This MoU is an important step accelerating India’s semi-conductor manufacturing ambitions. The investment of Rs 1.54 lakh crore will create a significant impact to boost economy and jobs. This will also create a huge ecosystem for ancillary industries and help our MSMEs.”
Vedanta and Foxconn signed an MoU with the Gujarat government on Tuesday. (Twitter/@Bhupendrapbjp)
Share
