Indo-Russian defence JV faces land hurdle in West Bengal

Russian partner refuses to infuse funds unless land is obtained; Indian JV partner remains sole investor in the project

Ural India, a joint venture between Uralaz, one of Russia's biggest automobile companies, and Kolkata-based Motijug Agencies, which was formed to set-up a truck manufacturing unit for the defence sector in Haldia, West Bengal, is in stalemate over unavailability of land.

With Uralaz refusing to infuse any funds in the project unless the requisite amount of land is obtained, Motijug Agencies remains sole investor in the project.

Back in 2006, even before the Tatas intended setting up small car factory, Nano, in Singur, Ural India was flagged off by West Bengal's former chief minister Buddhadeb Bhattacharjee as one of the biggest automotive investment in the state entailing a fund requirement of nearly Rs 550 crore. The earlier Left Front government in the state had promised allotting 300 acres of land for the project, against the requirement of 500 acres. Subsequently, the government had allotted 96 acres of land to the company.

Notably, according to the requirement by the defence sector, only the testing track facility for the project would require a land parcel of minimum 100 acres.

"We have been repeatedly requesting the government to allot more land. However, the present government not showing much interest in allotting more land, and thus we are unable to proceed with the project," said J K Saraff, Chairman of Ural India.

So far Motijug Agencies had invested Rs 100 crore in the plant, which manufactured trucks, as par orders, said Saraff.

According to the original plan, West Bengal Industrial Development Corporation (WBIDC), the government body to facilitate investments, was expected to hold 11 per cent equity stake in Ural India. However, according to Saraff, WBIDC is no longer a proposed shareholder in the project.

"We are no longer inviting WBIDC as a stakeholder," said Saraff.

Krishna Gupta, managing drector, WBIDC, refused to comment on the issue.

The proposed plant was expected to manufacture 7,000 heavy duty trucks, along with products, high performance trucks, buses and tippers and dumpers, in the first year of production.

According to the Section 14Y of the present Land Reform Act, other than a few industries in the exempted category, firms are not allowed to hold land in excess of 24 acre without government permission.