Karnataka loses Hero MotoCorp project to AP

Tax sops from the Centre to newly-created States decisively swung the Hero MotoCorp’s ₹3,000-crore project in favour of Andhra Pradesh.

Karnataka’s Additional Chief Secretary to Commerce and Industries department Ratna Prabha told Business Line that the State could not match Centre’s incentives to new States and lost the race to the neighbouring State.

The loss has prompted the political and bureaucratic set-up to do a reality check on why big ticket investments fail to come to the State. It needs to take immediate corrective measures before rolling out the red carpet investors at the forthcoming GIM, according to a senior official with Bangalore Chamber of Commerce and Industry.

In the last five years, the State has lost many projects for reasons such as political instability and lack of land bank.

In the case of Andhra Pradesh, Centre doled out a special package – 10-year income tax exemption and 12 per cent exemption on Central Excise duty to help the divided State to hasten industrialisation.

Hero MotoCorp, ever since it narrowed down the location in Karnataka eight months ago, had been driving a hard bargain. The company originally had planned to invest at Mummigatti village near Dharwad in north Karnataka.

For that, the State government had approved initial allotment of 300 acres of land (including land for ancillaries) and later scaled it up to 500 acres.

According to the industries department official, Hero MotoCorp planned to use the land for establishment of the mother plant, a tech park, consolidation centre and for ancillary units. The tech park was being set up for supply of parts required by the mother plant on a ‘just in time’ basis.

H V Harish, past president of BCIC and member of the State Government’s Task Force on Manufacturing, said, “It is a major blow to Karnataka’s industry-friendly image which it had built over the years. We have been cautioning the government over the expected large-scale migration to neighbouring States.”

Members of various other Chambers also pointed out that Chief Minister Siddaramaiah should shed the Industry ministry portfolio in favour of another Minister so that more attention could be accorded to the growth of the industry.

S Sampathraman, President, Federation of the Karnataka Chamber of Commerce and Industries (FKCCI), said, “Simply pronouncing policies on paper will not suffice unless it is implemented with speedy project clearances.”