 "Foxconn delay leaves Maharashtra jittery")
With the conclusion of the Make in India Week here on Thursday, Maharashtra is yet to get a formal proposal from Foxconn to acquire 300 hectares (ha) for a factory for which it had made a commitment of $5 billion.
In August, the Taiwanese company had made a commitment to set up factories in the state, which the Devendra Fadnavis government claimed was a successful instance of wooing foreign direct investment, defeating rivals Karnataka, Andhra Pradesh and Telangana.
Maharashtra had signed a memorandum of understanding with Foxconn for providing land to set up an electronics manufacturing facility and a research hub.
“We haven’t got a formal proposal,” a state industries official who works on such investments told Business Standard, a fact confirmed by state industries minister Subhash Desai.
The official expects the proposal to be sent once due diligence and finalisation of the project report are completed. But such confidence is not shared by others in the government. some in the state Cabinet and bureaucracy are getting restless as the investment has not materialised, despite over a dozen visits made by Foxconn’s senior management officials, where they held meetings and visited prospective sites.
“On Wednesday, the company’s representatives were in Mumbai and told us that they are in the midst of doing due diligence and project preparation. The officials indicated that the land proposal would be submitted in due course. However, no timeline was given,” the state industries department official told Business Standard.
Further, the official said the Maharashtra Industrial Development Corporation has taken possession of 300 ha in Talegaon-Chakan in Pune district and notified land in the Khalapur area in Raigad district. “Once the company submits the proposal, the allotment process will be done after completing scrutiny,” the official said.
Desai said Foxconn had shortlisted Talegaon-Chakan and Khalapur. However, he said the company had not finalised the site, which he added was underway.
Foxconn Technology Group said as a matter of company policy they do not comment on market rumors or speculation. However, the company confirmed that a pilot site in Maharashtra will begin manufacturing cell phones in mid-2016,
"As a long-term investor and partner to the local communities where we operate, Foxconn is committed to collaborating with our partners in India to support the sustainable development of India’s technology and manufacturing sector. Our significant plans in India are being finalized and will be rolled out in phases over the next five years. The announcements made in 2015 regarding our plans in India and the Memorandum of Understanding (MoU) signed with the government of the state of Maharashtra, India, outlining investments that Foxconn intends to make, underscore the company’s commitment to the country," Foxconn said in an email response on Friday.
Foxconn has taken 2,000 sq feet of office space on rent in the Cuffe Parade area in Mumbai and 150,000 sq ft in Mahape industrial area, Navi Mumbai on lease for the production of Xiaomi and Reliance Jio's Lyf smartphones. Production is yet to begin.
For the Cuffe Parade office, the state government agreed to bear the rent.
Maharashtra has also offered several sops to Foxconn, which include a subsidy on fixed capital investment without any limit on the amount, an additional 20 per cent capital subsidy above central government subsidies. This apart, the company will get 100 per cent exemption from stamp duty during the investment period, cash subsidy of 50 per cent (or up to $10 million a year) on research and development costs and exemption from local body taxes such as property, land and entry tax.
However, Foxconn's $ 5.3-billion plan to acquire Japanese major Sharp may be of higher priority for it than expanding in Maharashtra.
"I don't know the amounts involved, but I’d be very surprised if it was more than a few hundred million dollars. My take is that's probably the extent of the '$5 billion' ·you'll be seeing for a while," said Alberto Moel, senior research analyst, Asian IT hardware for Bernstein Research, on Foxconn's investments in India.
"Terry (Gou) is distracted with much bigger fish (more or less a white whale) as he chases Sharp down for far more than that," Moel added.
In August, the Taiwanese company had made a commitment to set up factories in the state, which the Devendra Fadnavis government claimed was a successful instance of wooing foreign direct investment, defeating rivals Karnataka, Andhra Pradesh and Telangana.
Maharashtra had signed a memorandum of understanding with Foxconn for providing land to set up an electronics manufacturing facility and a research hub.
“We haven’t got a formal proposal,” a state industries official who works on such investments told Business Standard, a fact confirmed by state industries minister Subhash Desai.
The official expects the proposal to be sent once due diligence and finalisation of the project report are completed. But such confidence is not shared by others in the government. some in the state Cabinet and bureaucracy are getting restless as the investment has not materialised, despite over a dozen visits made by Foxconn’s senior management officials, where they held meetings and visited prospective sites.
“On Wednesday, the company’s representatives were in Mumbai and told us that they are in the midst of doing due diligence and project preparation. The officials indicated that the land proposal would be submitted in due course. However, no timeline was given,” the state industries department official told Business Standard.
Further, the official said the Maharashtra Industrial Development Corporation has taken possession of 300 ha in Talegaon-Chakan in Pune district and notified land in the Khalapur area in Raigad district. “Once the company submits the proposal, the allotment process will be done after completing scrutiny,” the official said.
Desai said Foxconn had shortlisted Talegaon-Chakan and Khalapur. However, he said the company had not finalised the site, which he added was underway.
Foxconn Technology Group said as a matter of company policy they do not comment on market rumors or speculation. However, the company confirmed that a pilot site in Maharashtra will begin manufacturing cell phones in mid-2016,
"As a long-term investor and partner to the local communities where we operate, Foxconn is committed to collaborating with our partners in India to support the sustainable development of India’s technology and manufacturing sector. Our significant plans in India are being finalized and will be rolled out in phases over the next five years. The announcements made in 2015 regarding our plans in India and the Memorandum of Understanding (MoU) signed with the government of the state of Maharashtra, India, outlining investments that Foxconn intends to make, underscore the company’s commitment to the country," Foxconn said in an email response on Friday.
Foxconn has taken 2,000 sq feet of office space on rent in the Cuffe Parade area in Mumbai and 150,000 sq ft in Mahape industrial area, Navi Mumbai on lease for the production of Xiaomi and Reliance Jio's Lyf smartphones. Production is yet to begin.
For the Cuffe Parade office, the state government agreed to bear the rent.
Maharashtra has also offered several sops to Foxconn, which include a subsidy on fixed capital investment without any limit on the amount, an additional 20 per cent capital subsidy above central government subsidies. This apart, the company will get 100 per cent exemption from stamp duty during the investment period, cash subsidy of 50 per cent (or up to $10 million a year) on research and development costs and exemption from local body taxes such as property, land and entry tax.
However, Foxconn's $ 5.3-billion plan to acquire Japanese major Sharp may be of higher priority for it than expanding in Maharashtra.
"I don't know the amounts involved, but I’d be very surprised if it was more than a few hundred million dollars. My take is that's probably the extent of the '$5 billion' ·you'll be seeing for a while," said Alberto Moel, senior research analyst, Asian IT hardware for Bernstein Research, on Foxconn's investments in India.
"Terry (Gou) is distracted with much bigger fish (more or less a white whale) as he chases Sharp down for far more than that," Moel added.