Ahead of the Assembly elections, Maharashtra government today signed four agreements with leading auto companies, involving an investment of Rs 11,510 crore.
The agreements were signed with domestic auto majors Tata Motors, Mahindras and Bajaj Auto, and German luxury car major Volkswagen, following the government restoring VAT set-off claims to gross sales.
Chief Minister Prithviraj Chavan, state industries minister Narayan Rane, M&M chairman Anand Mahindra, Tata Motors executive director for commercial vehicles Ravi Pishrody and Volkswagen executive director Pankaj Gupta were present on the occasion.
Under the agreements, Tata Motors and Mahindra will invest Rs 4,000 crore each, Bajaj will pump in Rs 2,000 crore while Volkswagen will invest Rs 1,510 crore in existing facilities.
In April 2011, the state amended the VAT Act to make tax set-off claim applicable on net sales and not on gross sales. Auto industry complained that this took away the competitive advantage of the Chakan-Talegaon auto hub. Some companies had even threatened to pull out their investments from the state.
Under the tweaked norms and the state's industrial mega project policy announced in June 2005, large auto investors and also non-auto sector investors with an investment of Rs 1,500 crore or more are entitled for VAT set-off claim on gross sales. However, the claim will not exceed 12.5 per cent of the total eligible VAT refund in a year.
"It was an error of judgement at that time," Chavan said, adding that the tweaking of VAT norms will help the industry.
"We have already invested Rs 4,000 crore in the Chakan plant so far and are looking at investing an additional Rs 4,000 crore during next seven years," Mahindra said.
Of the four projects, three will be in Pune district and one in Waluj in Aurangabad. Total investment of all four projects together will result in employment opportunities for 6,270 people, the government said.