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Punjab offers special concession to Ratan Tata
Prabhjot Singh
Tribune News Service

Chandigarh, March 7
Budgetary provision for special concessions for one year to super mega manufacturing units may help the State Government to convince Mr Ratan Tata to prefer Punjab over Himachal Pradesh for his new small car manufacturing unit.

The Punjab Finance Minister, Mr Surinder Singla, in his second Budget presented in the State Vidhan Sabha today, announced that all new super mega manufacturing units with a minimum investment of Rs 1000 crore each would be given special concessions. This, he said, was to offset the tax holiday which such mega manufacturing industrial houses would enjoy for locating their units in hilly states, including Himachal Pradesh and Uttaranchal.

Blaming the previous NDA Government at the Centre for announcing special tax holiday, he named previous Prime Minister Atal Bihari Vajpayee as well as the Leader of the Opposition Parkash Singh Badal for encouraging the flight of capital from Punjab to neighbouring hilly states. This reference, which led to strong vocal protests from the Opposition, were overruled by the Speaker, Dr Kewal Krishan.

Subsequently, Mr Singla, while addressing newsmen, explained that though the Centre was free to announce any special package for any State this should not be done by sacrificing the interests of other States.

He said why should any industrial house prefer Punjab to hilly states where they were entitled to concessions in central excise as well as income tax. “Unless we can match those concessions, we cannot convince super mega manufacturing units to come to Punjab. It is not easy to offset 16 per cent excise duty rebate on a small car priced at Rs 1 lakh.’’

Giving special concessions of Rs 1,000 crore spread over a period of 10 years would ultimately benefit the state besides accelerating the rate of growth. Generation of employment, both direct and indirect, would be the other major benefit from such major manufacturing unit coming to the State.

To convince Mr Tata, Punjab offered a special package for locating his automobile unit in the state. Sources reveal that each vehicle would require spare parts of Rs 40,000 on which Value Added Tax of 4 per cent was leviable.

“The Council of Ministers will be empowered to approve special incentives for such units under a well defined policy, which, among other things, will have regard to the level of investment to be made, ancillarization and employment to be generated by such units,” said Mr Singla in his speech.