A proposal from tyre manufacturer Ceat to set up a manufacturing facility in Tamil Nadu with an investment of Rs 40 billion received the state Cabinet's nod on Thursday. The decision comes at a time when the state has been under criticism for not attracting more investments, especially in the automotive sector, while neighbouring states are getting more investments.
According to a source in the state government, the Cabinet meeting held on Thursday discussed the proposal, talks on which had been underway for several months now, and approved it. With this, the company can go ahead and start procedures to set up the facility. While earlier reports said that the investment proposal was to the tune of around Rs 50 billion, sources now say that the approved proposal is for Rs 40 billion. Ceat has already purchased the land for the facility, they added.
The state government will soon sign a memorandum of understanding (MoU) with the company to take the investment proposal forward.
One of the issues that withheld investment proposals so far was related to the incentives offered by the state government and a requirement to change some of them according to the changed tax regime with the implementation of the Goods and Services Tax (GST). The government was planning to bring in some changes in the industrial policy to change the structure of incentives since the taxes were united under GST. Sources said that the state is considering investment proposals case-by-case and is offering structured incentive packages.
Tamil Nadu, which has seen several agitations, including against certain industries, has been losing out to competitive states like Andhra Pradesh when it comes to attracting new investments, according to various opposition parties and critics. Investment intentions in the state have also seen a decline in the past year, according to the Union Ministry of Commerce.