On its way to becoming India’s automobile hub, Gujarat is offering incentives galore to lure automobile companies to the state. It is learnt the latest entrant, Maruti Suzuki India, has been offered a refund of value-added tax (VAT).
VAT would be refunded to the company for the next 15 years, provided the amount didn’t exceed the company’s investment in the state, said a senior state government official. Maruti is investing Rs 4,000 crore to set up a 2,50,000-unit-per-year plant at Hansalpur, about 110 kilometres from here.
The incentive has been mentioned in the state support agreement the company signed with the state government on June 2, the official said. “This is similar to the incentive offered to Ford India earlier. This apart, the companies have also been offered land at prevailing market rates,” he added.
Gujarat has emerged as a preferred destination for investors, largely due to its industry-friendly image, good infrastructure and port connectivity. Various incentives offered by the state government is another attraction for companies making a beeline for the state. Sources said the Gujarat government would offer incentives to any major project coming to the state, provided it entailed investment of more than Rs 1,000 crore.
In July, 2011, Ford India had signed a memorandum of understanding with the state government to set up a Rs 4,000-crore plant over 460 acres at Sanand. The plant, expected to start production by 2014, was also offered a tax refund incentive. Another auto major, PSA Peugeot Citroen, is learnt to have been offered a soft loan of about Rs 4,000 crore with a late repayment option. Peugeot had also lined up an additional investment of about Rs 4,000 crore to set up a plant with an initial capacity of 1,65,000 units a year. Owing to the recent slowdown in Europe, the company has, as of now, held back its decision to start work on the plant.
