Industry heading to Rajasthan from Kanpur

Auto ancillary units in Kanpur are shifting base to Rajasthan due to a better law and order situation in the state.

Kanpur is facing yet another exodus of industry. The auto components industry, which had started doing well in the city, is now being weaned away by Rajasthan with attractive offers.

The Rajasthan Industrial Investment Corporation (RIICO) has chosen the right time to induce the city auto component industry to invest in Jaipur.

The city is facing a major crisis, because various large units have closed down. The largest of all, LML, is shut, rendering a large number of ancillaries out of work.

While this was happening here, Hero Honda announced its third plant will be established in Jaipur. After the announcement, a delegation from the Rajasthan Industrial & Investment Corporation arrived in the city, stayed here for four days and gave handsome offers to the entrepreneurs.

Tarun Khetrapal, state president of the Indian Industries Association, told Business Standard the real thing was not the financial concessions, which are icing on the cake, but that the law and order situation in Rajasthan was far better; there is no cut in power supply in industrial areas; the quality of power is satisfactory; infrastructure is good; the inspectors do not harass, and the suvidha shulk, money to do work, is much less there than here.

More importantly, the auto components manufacturers want to locate themselves within 100 km of Delhi, since the latter has emerged as a hub of automobile manufacturing. The area from Delhi to Daruhera is the most sought-after one.

For the ancillaries of LML, this is a golden opportunity since these machines can be used to manufacture components for Hero Honda as well. As the ancillaries have no work and despite the initial announcement if there is no sign of any strategic investor making its appearance at LML, the ancillaries will be only too glad to shift if Hero Honda wants them to be close to the factory.

The concessions are: up to 50% of the payment of VAT for the first seven years will be given to the entrepreneurs in cash, which can be used in various ways, like interest subsidy of 5 per cent on loans, wage/employment subsidy of 25 per cent for seven years.

Besides these, other exemptions of up to 50 per cent are for entertainment tax, electricity duty, stamp duty, mandi tax and 50 per cent for conversion charge.

These are more lucrative than those offered by UP; for instance, in Rajasthan 6 per cent of the land cost is charged for registration as against 10 per cent in UP.

Khetrapal and IIA office bearers said they had invited them to their main office in Lucknow, where the industry minister of and industry secretary of Rajasthan would come and the issue of concessions would be sorted out.

"They have told us that we should be able to tell them the total package which is required, and how many want to establish units. Our delegation will be going to Jaipur in August to meet the chief minister of Rajasthan to finalise the investment proposals," one of them said.

When asked how many are ready, Khetrapal said it was not possible to say anything at this stage, because the Rajasthan delegation had left only three days ago and "we are yet to give a detailed report on the subject. However, the position will be clear in the general body meeting of the IIA at Mussouri on July 2, where the delegation from Rajasthan will come".

However, there is no threat from Uttaranchal, which was the first state to take away a large number of extension projects from Kanpur. The concessions in duties will be available only when the plant starts operations in 2007.

Thus those who are already working they will be able to do it, but no new party shall be able to do the needful. Thus the Uttaranchal threat has receded.