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Maharashtra, Telangana, TN in the race to woo Taiwanese electronics giant Foxconn

Foxconn, the largest electronics manufacturer in the world, has big expansion plans for India, from expanding its mobile phone manufacturing to partnering with mining giant Vedanta for semiconductors and display fab early this year. The Taiwanese multinational is planning to set up an EV plant as well, and is scouting for states for setting up plants for all the three.

Contrary to rumours that suggest Foxconn might settle for just one state, industry insiders say the company might settle for different states instead, for different sectors mentioned above. For instance, the company already has manufacturing facilities in Tamil Nadu and Andhra Pradesh.

Business Today has reached out to Foxconn but hasn’t received any response at the time of publishing the article.

States too are eager to offer the best incentives, and primarily because of three broad reasons. First, Foxconn setting up a new plant in any state will position it as a major manufacturing hub on the world map. Secondly, it will secure continuous investments for the decade to come. And thirdly, it will create job opportunities within the state.

As per the information available, on the other hand, the state incentives will be over and above the central government’s production-linked incentives (or PLI) for the semiconductor sector.

An industry source told Business Today that while Foxconn might be able to attract cash incentives for mobile phones, semiconductors and display fab from states, it will only get land and infrastructure support for the EV.

After meeting Foxconn’s delegations in Delhi, Karnataka’s industries minister Murugesh Nirani, talking exclusively to Business Today on incentives, said that the state could go beyond the existing incentives provided.

“We will negotiate with Foxconn, as far as incentive is concerned, we will go beyond the incentives provided, according to our policy. We have Industrial policy 2025 for different zones, we are giving incentives on the basis of zones. If the investment is over Rs 500 crore then there would be one-on-one negotiation for incentives between the investor and the government,” the minister said.

He also added that neighboring states are offering incentives but they are not fulfilling it that is why repeat investments are coming to Karnataka.

But Karnataka isn’t the only state vying for Foxconn’s attention. In the past week, Maharashtra, Telangana and Tamil Nadu too have tried to woo Taiwanese delegation. On Friday, Foxconn had met the ministerial delegation from Maharashtra, where discussions around advanced investment plans in the semiconductor and consumer electronics segment took place. Telangana’s Information Technology and Industries Minister, KT Rama Rao, earlier met the Foxconn chairman to explore investment opportunities in the state. Tamil Nadu too had joined the list of states making a strong pitch to woo Foxconn, to invest in its state.

One senior bureaucrat from Tamil Nadu, claiming anonymity, said that after consultation with Foxconn, Tamil Nadu is confident of having Foxconn as one of the big investors in the state.

“We got a little positive feedback from the investors from what their expectations [are] and also got positive feedback from what they felt how their experience in terms of their experience in Tamil Nadu has already been. We are confident we have put forth the best possible case,” the bureaucrat said.

Talking about the incentives, the bureaucrat also added: “There is an incentive package based on our policy, we have flexible capital subsidy package, we also have turnover package, but for particularly large investments, we have flexibility of creating a structured package of assistance that is when we sit down with investors and discuss at final level and that is between investors and us.”

Of the four states, Maharashtra and Tamil Nadu, near Pune and Chennai, respectively, are established car manufacturing clusters. Haryana’s Gurgaon-Manesar is the third popular automobile cluster and the state had approved this year a new policy pertaining to EVs. Under this policy, there will be 100 per cent reimbursement of stamp duty along with exemption in electricity duty for a period of 20 years. The state’s EV policy also gives a state GST (SGST) reimbursement at 50 per cent of the applicable Net SGST for a period of 10 years. In addition, companies who will manufacture EVs, components of EV and EV battery, and charging infrastructure will be incentivised with capital subsidy.

The Haryana policy is likely to attract new as well as existing automobile manufacturers to invest in EV manufacturing in the state. However, a senior official from Haryana, on condition of anonymity, said that the state has never been in talks with Foxconn and neither has Haryana approached the Taiwanese giant for investing in the state.

Talking about the states’ EV policies, Prabhu Ram, head-industry intelligence group at CMR, is of the opinion that India has been of late steering some impactful policy initiatives to bolster its overall EV ecosystem and to enable a faster EV adoption.

“For Foxconn, EV is a new and big bet, and manufacturing in India makes prime sense. On the back of its manufacturing presence in India, Tamil Nadu, Gujarat and Maharashtra are potentially major bets for Foxconn’s EV play, given the ready automotive ecosystem in the states. Other Indian states are also seeking to pitch for investments. The key consideration for Foxconn in locating its EV manufacturing unit in an Indian state would include an evaluation of the overall business and policy climate as well as the market potential therein,” Ram added.

Last week, Foxconn’s CEO and chairman Young Liu met with Prime Minister Narendra Modi. Liu, with his team, had also interacted with the Electronics and IT (MeitY) minister Ashwini Vaishnaw and Minister of State for MeitY, Rajeev Chandrasekhar. Over the last few years, the iPhone manufacturer has also emerged as a preferred partner for an increasing number of smartphone players including Xiaomi, and Nokia, among others. BusinessToday

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