Shiv Sena leader Aaditya Thackeray’s Saturday protest at Pune’s Talegaon, the site for the proposed Rs 1.5 lakh crore ($20 billion) semiconductor project of the Vedanta-Foxconn joint venture (JV), has signalled a spiralling political row in Maharashtra days after the JV despite being in discussion with the Maharashtra government on the project for years switched to Gujarat.
A political slugfest has erupted in Maharashtra since September 13, when the Vedanta-Foxconn signed an MoU with the Gujarat government for their semiconductor project, with the Opposition MVA blaming the Eknath Shinde-BJP government for letting the flight of the big-ticket project to the neighbouring BJP-ruled state.
Attacking the Shinde-Devendra Fadnavis dispensation, Sena president Uddhav Thackeray, while addressing a party rally earlier this week, alleged that the government was “lying” on the issue and should be “ashamed” of the project going to Gujarat, even as he offered his support to it to bring the project back to Maharashtra. “Let’s come together and bring it back. I will also come with you,” he told the Sainiks.
Cornered over the Vedanta-Foxconn project, which was one of the biggest industrial investments projected to come to Maharashtra, the ruling camp is now desperately looking for a face-saver, with CM and rebel Sena leader Shinde reaching out to Prime Minister Narendra Modi and Union home minister Amit Shah in this regard.
Speaking to the Express Group last Sunday, Shinde said his government will announce a mega project for the state very soon.
Vedanta-Foxconn project shift furore
An industrial state like Maharashtra, which has almost all the key elements to attract investors – land, skilled labour, port, road connectivity, water, knowledge ecosystem – has been waiting for a mega industrial investment for years. While the state has seen various investments, from medium to large scale projects, coming to the state in the IT and automobile sectors among others, a mega investment has not fructified over the last decade despite the Magnetic Maharashtra summits and the “Make in India” investors summit in 2015 – when Foxconn had made its first investment commitment of $5 billion to the state.
If the wait for Foxconn to invest in the state lasted for 7 years, losing it to a neighbouring state in a matter of two months or a quarter, was set to unnerve the political class and the residents of the state alike.
While the continuous flow of new projects in any state keeps its economic growth on track, creates jobs for its people and also enhances social development, mega projects worth $3-5 billion or more give impulse and ripple impact that leads to the building of the ancillary industry, development of service sector and a thrust to the real estate, among other things.
The Vedanta-Foxconn project had come as a hope for Maharashtra, which has been reeling under an accumulated debt of Rs 6.50 lakh crore, as the state saw it as a golden opportunity to give impetus to both its sluggish investments and channelise it towards job creation after the devastating Covid-19 pandemic.
Terming the Vedanta-Foxconn project loss as a major setback for Maharashtra, a top economist, who has been closely watching the state’s progress over more than three decades and has been involved with various governments in the state with regards to its development, said, “It takes a long time for mega projects to fructify as a lot of home work has to go into it and bureaucrats, political class are involved. So in that sense the loss of Vedanta-Foxconn is a big setback. Also when I take a closer look, I don’t see a mega project in the vicinity and so it is both loss of time and opportunity.”
While the state had also announced a Rs 3 lakh crore refinery project in Nanar in 2015, which promised to generate over 1 lakh jobs, it has failed to see the light of the day. The new government is, however, hopeful to revive the project.
As regards the past mega investments in the state, the two that made their mark were the $3 billion Enron power project announced by the US major in 1992 and the $13 billion Jaitapur nuclear power project for which the agreement was signed with the French company in 2010. While Enron ran into trouble and also resulted in financial loss for the state, its debacle led to a power crisis, with the state running into power deficit for several years as power producers stayed away from committing investment in the power sector in view of the expected big capacity addition of 2,000 MW through Enron’s natural gas-based Dabhol power project. Also, the Jaitapur nuclear power project has not been able to take off in the manner it was envisaged.
The politics of economy
With the latest big investment opportunity gone, the Maharashtra government is now hoping for a bigger project and is counting on the BJP-ruled Centre’s blessing. However, even as Shinde exuded confidence in pronouncing that Maharashtra will bag a major investment in the coming days, Deputy CM and senior BJP leader Fadnavis has exercised caution warning that “Maharashtra will have to initiate concrete steps to rebuild the confidence of the investors.”
The government is also hopeful of benefiting from a “double-engine” government — a BJP government both in the state and at the Centre. While the Vedanta-Foxconn project might have been lost due to the lack of the Centre’s intervention (CM Shinde’s July 26 letter to Vedanta chairman Anil Agarwal showed that Vedanta had asked the state government to get the “Central Government alignment”), the current government still hopes to capitalise on a “favourable” central government. This “alignment” has already led to breakthroughs in some key infrastructure projects in the state such as the land acquisition approvals for the Mumbai Ahmedabad bullet train project, clearance for the metro car shed land in Mumbai, and the Dharavi redevelopment project. These projects could not move ahead during the previous Uddhav Thackeray-led MVA government, comprising the Sena, BJP and Congress, as the state and Central governments used to be locked in a recurring tussle over them.
While the state government has redoubled its efforts to clinch a big-ticket project ahead of the crucial Brihanmumbai Municipal Corporation (BMC) polls, slated for late 2022 or early 2023, it is working on multiple fronts, including the revival of the Rs 3 lakh crore refinery project. At the Mumbai industrial conclave last week, Fadnavis indicated his government’s resolve to revive the refinery project. He said, “The refinery project is high on our plate. But the inordinate delay has made it difficult to match the same scale. Even if it is taken to its logical end it will be on a smaller scale.”
Another project under process and being discussed on priority is Wadhawan Port at Raigad. With access to natural deep draught the project when completed will have the potential to anchor even the biggest ship across the world.
Concerned over losing the the Vedanta-Foxconn project to Gujarat, Shinde and Fadnavis seem to be hopeful now that they will get the Centre’s backing for these critical large projects in Maharashtra.
It is also important that the state improves its record over the conversion of signed MoUs into real investments on the ground. In the past 7.5 years the state hosted two major investment events — Magnetic Maharashtra and Magnetic Maharashtra 2.0. The first Magnetic Maharashtra was held in 2018 under the then Fadnavis-led BJP-Sena coalition government. At the end of the three-day conclave, the state had then signed 4210 MoUs with promised investment of Rs 16 lakh crore, of which around Rs 12.1 lakh crore was investment from private industries and Rs 3.9 lakh crore was a proposal signed between the Centre and state governments. However, only 50 per cent of the total proposed investments, which were signed, could be realised and have been since at various stages of implementation.
The second Magnetic Maharashtra was held under the MVA government in 2020 when Vedanta-Foxconn had committed their semiconductor project to the state, subject to the approval from the Centre.
Although the Vedanta-Foxconn project’s departure from the state has now given the Opposition MVA a handy weapon to score points against the BJP-Shinde regime, nobody is disputing the state’s ability to “overtake” Gujarat.
The Leader of the Opposition and NCP leader, Ajit Pawar, said, “We had promised a 1,000 acres land parcel to the company in Talegaon. If Vedanta-Foxconn has buckled under political pressure to relocate the project it is a sad comment on politics.”
Taking up the political challenge, Fadnavis has pledged to outstrip Gujarat in coming days. At least two projects show promise and are cited to show the BJP’s success — the Delhi-Mumbai Industrial Corridor (DMIC) complete with two nodes, Shendra-Bidkin Industrial Area and Dighi Port Industrial Area, and the Aurangabad Industrial City (AURIC). While Shendra-Bidkin Industrial Area is being developed as a large-scale industrial cluster, the Dighi Port Industrial Area will become a port as well as an industrial hub. On the other hand, the AURIC is a greenfield smart industrial city spread across 4,030 hectares with investments of Rs 5,500 crore with the state government estimating that it can generate more than three lakh jobs over the next 15 years.
The politics of rivalry
The creation of Maharashtra and Gujarat on the same day, May 1, 1960, through reorganisation of states was not a smooth affair. Mumbai (then Bombay) was the bone of contention between them. To ensure Mumbai remains in Maharashtra, a long-drawn agitation, Samyukta Maharashtra Movement, was launched in 1956. About 105 people lost their lives in this movement. In this background, Maharashtra versus Gujarat has always been a fraught discourse.
Despite the co-existence of both Marathi and Gujarati communities in Mumbai, the faultlines remain. And following the switch of the Vedanta-Foxconn project to Gujarat, the Opposition has again brought this debate to the centre stage of Maharashtra politics. Confronted with the in-house challenges following a major split within, the Uddhav-led Sena seems to have got a major political issue on a platter that it hopes would cut ice with the people besides helping the party to hit back at the BJP. This assumes more significance as the BMC polls may be held over the next three-four months, which will settle the key question whether the Uddhav Sena would be able to retain its hold over the BMC that it has been able to do successfully over the last 25 years.
The BJP-Shinde alliance, on the other hand, has been sensing an opportunity in the upcoming BMC polls to bring an end to the Sena rule from there and deal a body blow to Uddhav’s party. It, however, reckons that if Maharashtra versus Gujarat narrative gains traction, it might be “politically fatal” and hence they are going all out to quell the controversy and promise a mega industrial project for the state soon.
Even as the BJP-Shinde combine has set higher electoral targets for the 2024 Lok Sabha and Assembly polls — in the previous 2019 polls, the BJP had won 23 out of 48 Lok Sabha seats and 105 out of 288 Assembly seats in the state — a polarisation along Maharashtra versus Gujarat lines might undermine it. Demographically, 65 per cent of the Maharashtra population is youth with an average age of 27. No political party can overlook the youth aspirations given its presence and potential to make or wreck the electoral results in the state. And the departure of a mega semiconductor project — which is regarded as the industry of the future — from the state makes for bad optics, both in the eyes of the state political class as well as its youth.
The NCP’s youth leader and Karjat-Jamkhed MLA, Rohit Pawar, says, “We are not against any state’s development. But the question is why sacrifice Maharashtra youth. Why should our next generation pay the price?” Now, this may be question, which cannot go unaddressed for long as it is not just about employment and financial implications but also the aspirations of youth, whose vote base could play a big role in the electoral outcome.