In a major fillip to industrialisation in the backward Telangana region, Mahindra & Mahindra (M&M) will set up its tractor manufacturing unit at its existing facility at Zaheerabad in Medak district of Andhra Pradesh, according to the government sources.
Andhra Pradesh Chief Minister N Kiran Kumar Reddy will lay the foundation stone for the plant at a function here tomorrow evening. M&M President (Automotive and Farm Equipment sectors) Pawan Goenka and others will attend the function.
M&M will invest Rs 300 crore on the tractor manufacturing facility over the next three years and provide direct employment to about 2,000 people and indirect employment to another 5,000 persons, the sources tell.
The proposed facility, Mahindra’s first in South India, is intended to manufacture 90,000 tractor units per year and also 3 and 4-wheeler commercial vehicles.
He said M&M was the world’s largest manufacturer of tractors, in terms of numbers, with seven plants in India, two each in China and USA and one in Australia.
M&M presently has its automobile plant spread over 343.36 acres of land at Zaheerabad, 136-km from Hyderabad, where its products like UV (Maxx), 3-wheelers (Champion Alfa), Light Commercial Vehicles and buses are manufactured. It now has employee strength of 641 and a vehicle assembly capacity of 218 vehicles per day.
M&M did not seek any more land for its new facility and said it would be built on the vacant land at its existing unit.
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M&M wanted the state government to extend a "special package of incentives" in view of the large employment-generation potential in the backward Telangana region, official sources said.
The state government agreed in principle to consider 100% reimbursement of Value-Added Tax (state component of Goods and Services Tax in future) for 10 years from the date of commencement of production.
"As per initial projections, the financial implication of VAT for the project will be Rs 120 crore in the first five years in a phased manner," said a top official of the Industries Department.
The state government would also recommend to the Government of India allocation of natural gas for the M&M’s project on a priority basis.
"All other regular incentives listed in the AP Industrial Policy 2010-15 will also be extended to M&M for the new project. Similar incentives will also be provided to the ancillary units that will come up at the Vendor Park close-by," the official said.
About 250 acres of land currently available with the AP Industrial Infrastructure Corporation at the Industrial Park near Zaheerabad would be reserved for ancillary units/vendors for creation of a manufacturing cluster in collaboration with M&M, the official added.
The state government has agreed to consider M&M’s request for allotment of land on the outskirts of Hyderabad for setting up of its National Service Support Centre.