LG seeks tax cuts to localise

Proposal yet to get necessary state government approval

LG Electronics India has asked the West Bengal government for some incentives to develop the state as its operational hub for the region as well as for exports to neighbouring country Bangladesh.

The proposal was submitted some months ago and was yet to secure necessary approvals from the state government, particularly on requests relating to tax incentives.

LG submitted its request to the state government around seven months back asking for some tax breaks so that it could proceed with its plans in using the excess capacity of local manufacturers of consumer electronics and home appliances in West Bengal to cater to eastern India and Bangladesh, S N Rai, senior general manager, corporate logistics and communications of LG, said.

LG's sales in West Bengal was around Rs 250 crore and the company said it expected sales to rise to Rs 350-400 crore during 2005-06.

"The West Bengal market is growing at a rate 30-40 per cent and so LG is willing to use the excess capacity of the local manufacturers to produce under LG's supervision," said Rai.

LG will be investing in those plants to technologically upgrade them as well provide the technical know-how.

The local manufacturers will be producing under strict supervision of LG, noted Rai.

LG has asked for some tax incentives and breaks from the state government to make the initiative viable but there has not been any response till now, Rai noted.

Logistics costs contributed to around 5-6 per cent of overall cost owing to lack of infrastructure in the state and therefore some form of incentive was necessary, explained Rai.

The Bangladesh market was expected to generate a business of nearly Rs170crore for the company during 2005-06, he added.

Rai said LG had already invested around Rs 20-25 crore in the state for outsourcing a part in its television segment.

LG could be bringing in investment of around Rs 140 crore for the purpose provided the expected incentives and breaks were granted from the state government, noted Rai.

LG's overall sales last fiscal registered a growth of around 45 per cent over the previous year.

A sales target of Rs 9000 crore has been set for the current year, he added.