Maharashtra’s loss is Gujarat’s gain

The loss of the Vedanta-Foxconn project has caused an uproar in Maharashtra

Updated - September 26, 2022 01:19 am IST

Published - September 26, 2022 12:15 am IST

A man walks past the logo of Vedanta outside its headquarters in Mumbai

A man walks past the logo of Vedanta outside its headquarters in Mumbai | Photo Credit: REUTERS

A political row has spiralled in Maharashtra with mining conglomerate Vedanta and Taiwan-based electronics giant Foxconn choosing Gujarat over Talegaon to set up their multi-billion dollar semiconductor manufacturing unit. This project aims to make India self-reliant in electronics.

Blame game

The Eknath Shinde-Devendra Fadnavis government and the Uddhav Thackeray-led faction of the Shiv Sena are blaming each other for the loss of the project, which was estimated to bring about 1,00,000 direct and indirect job opportunities to the State. The signing of the Memorandum of Understanding (MoU) with the Gujarat government has also hurt Marathi pride as Vedanta had nearly finalised Maharashtra as the site for the project.

The claims and counterclaims could hamper the fortunes of the ruling dispensation in the upcoming Brihanmumbai Municipal Corporation elections, while the $20 billion (₹1.54 lakh crore) project will be a boon to Gujarat, which is scheduled to go to the polls in December.

Leaders of the Shinde faction and the BJP hold the previous Maha Vikas Aghadi (MVA) dispensation responsible for the loss, claiming that it sat on the project offer for seven months. They said that the Shinde-run government approved incentives worth ₹38,831 crore in July. Mr. Shinde accused the MVA government of not cooperating with the companies. “We came to power only one and a half months ago. Such projects don’t slip out of hand in one or two months. We held meetings with the companies as soon as we came to power,” he said. Soon after Vedanta and Foxconn signed an MoU with the Gujarat government, Mr. Shinde said he spoke with Prime Minister Narendra Modi who assured him that the State will get a “similar project or even a better one”. Mr. Shinde wrote a letter to Vedanta inviting the company to sign an MoU on July 29 to set up its plant at Talegaon near Pune, officials claimed.

Deputy Chief Minister Fadnavis sought to portray the issue as “healthy competition”. Stating that “Gujarat is no Pakistan, and it is our brother,” Mr. Fadnavis said Maharashtra fell behind Gujarat in attracting foreign investment during the MVA’s tenure, but will be ahead of everyone in the next two years. He advised the Opposition to focus on becoming “competent and efficient” and not “negative and desperate.”

The Opposition accused the BJP of lying, and slammed the government for losing out on the mega project. It alleged that the government came under pressure from Mr. Modi, whose home turf is Gujarat. “Soon after the project moved to Gujarat, the Centre started giving huge incentives, which clearly means the move was already planned. Now, stop criticising us. Let’s come together and bring back the project,” Mr. Thackeray said. The president of the Maharashtra Pradesh Congress Committee, Nana Patole, called Mr. Shinde a “dummy” Chief Minister and claims that the State was being run by Mr. Modi and Home Minister Amit Shah.

The BJP’s strategy?

What is interesting is that Gujarat was not even in the competition as it doesn’t have the required infrastructure. Besides Maharashtra, three other States — Telangana, Tamil Nadu and Karnataka — were competing for the project. These States have an abundance of IT resources and had offered financial and non-financial subsidies on capital expenditure, apart from cheap electricity. This is why officials are wondering why the company decided to set up the mega project in Gujarat instead.

When Vedanta held discussions with Mr. Shinde and Mr. Fadnavis and “almost finalised” the deal, the Maharashtra government was confident about the project. It offered a lucrative 30% capital subsidy for setting up the plant in the Talegaon industrial area, waiver on stamp duty, a power tariff subsidy, and help to set up a 750 MW captive solar power generation unit.

Vedanta and Foxconn are yet to finalise the location for the plant in Gujarat. This might take at least two weeks as they are evaluating various sites based on technical aspects, connectivity and commercial viability. The shift to Gujarat is being seen as an attempt by the BJP to buttress its poll prospects in Gujarat. There has been a trend of projects being delayed or transferred from Maharashtra to other States. Could it be that the BJP’s strategy is to rotate projects with massive investments from one State to another to suit its electoral advantage?

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