Industry policy hits auto hurdle

Ranchi, Feb. 7: Jharkhand's proposed new industrial policy will take some more time to be finalised as the state government will send a team to Maharashtra and Karnataka to understand benefits offered to the automobile sector there.

The decision comes in the wake of a representation by senior officials of Tata Motors, which claims to produce 45 per cent of commercial vehicles made in the country at its Jamshedpur plant. The officials conveyed that the company was not satisfied with certain clauses of the draft policy, which was sent to the chief minister for consent in December 2011.

"A three-member team, including MGNREGS commissioner Santosh Kumar, will be visiting Maharashtra and Karnataka next week to study the nitty-gritty of the industrial policies there, particularly clauses on reimbursement of Value Added Tax (VAT). So, the new industrial policy would take some more time," industry secretary A.P. Singh told The Telegraph.

Notably, since April 1, 2011, there exists no industry policy in the state. Although the new policy would be valid with retrospective effect, but in the absence of one at this juncture, there is scope for confusion.

The Tata Motors officials, who gave their representation to the office of chief secretary S.K. Choudhary, pointed out that as the company supports many ancillary units in and around Jamshedpur (which in turn submit VAT), the state should put in place a suitable clause of VAT reimbursement for Tata Motors.

In the previous industrial policy, there was provision for 75 per cent VAT reimbursement for eligible units. But as many of the parts used in manufacturing of commercial vehicles, particularly chassis for trucks and buses come from ancillary units situated in Adityapur Industrial Area, the ambiguity lies in whether to reimburse VAT to Tata Motors or to ancillary units.

The earlier policy used to reimburse VAT for big units like Tata Motors only, but the new draft suggests uniform reimbursement of VAT. However, 75 per cent reimbursement clause may get reduced to around 50 per cent, sources said.

State officials after studying the industrial policies of Maharashtra and Karnataka will try to find a middle path to ensure a win-win situation both for the government and the automobile major.

Earlier, the state industry department had held a couple of seminars and invited suggestions/recommendations from stakeholders for the new industry policy which is being framed under the chairmanship of a committee headed by state development commissioner Debashish Gupta.