According to a statement released by Uttarakhand government, Mahindra & Mahindra (M&M) is looking to set up a new production unit worth Rs. 3000 crores in the state. On April 26, 2012, the president of the automotive and farm equipment sector division of the company, Pawan Goenka, even met the Chief Minister of the state, Vijay Bahuguna.
The largest Sports Utility Vehicle maker of India, M&M will manufacture 2.5 lac vehicles on a yearly basis at this proposed plant. Therefore, it requires land worth 500 acre to establish the main facility, along with Rs. 200 crores for the supplier unit. As per the statement by the state government, Bahuguna commented that the company would be allocated a piece of land at Sitargunj for this upcoming project.
Regarding this development, a spokesperson of M&M commented, "Goenka met the CM of state to discuss potential future investment in the state. The discussion was preliminary and we cannot comment on the details."
Mahindra's decision to set up a plant in Uttarakhand follows its decision to move out of Maharashtra due to a dispute over refunding the Value Added Tax (VAT), which was earlier promised by the state government. M&M is asking the state government to refund the VAT it has paid for all the vehicle manufactured in Maharashtra, whereas the government is willing to refund the VAT only on units that the company sold there. The company has invested huge amounts in the West Indian state in its four wheeler division, where it develops cars, Utility Vehicles (UVs) and commercial vehicles. Currently, it has facilities in Kandivali near Mumbai, Chakan near Pune as well as in Nashik in the state.
One of the largest automotive companies in India, Mahindra has also invested in Chennai, Tamil Nadu, where the Mahindra Research Valley is located. It is a state-of-the-art Research & Development (R&D) unit that will be used for coming up with new products. A new manufacturing unit may also be set up in Chennai by Mahindra in coming time as the company is pondering over it as well.
M&M is not the sole auto manufacturer miffed with Maharashtra government. Bajaj Auto and Volkswagen India have also made their displeasure about the state's taxation policies quite clear. However, they are yet to move out of the state in order to establish plants and enjoy more acceptable taxation rules. Unless Maharashtra government changes its stance regarding the VAT issue, it will lose its position as the most sought after place for automobile manufacturers. Already, Gujarat is being considered as a suitable destination by many companies looking to make new investments.
