Multinational brands skip Gujarat for better deals

Gujarat is undoubtedly a preferred location for industries, but in the last one year, the state has lost out in attracting multinational brands including the world's biggest cosmetic group L'Oreal, tractor manufacturer John Deere and Korean car manufacturer Hyundai, to competing states like Tamil Nadu, Himachal Pradesh and Madhya Pradesh.

The latest loss to Gujarat comes in form of Amway which, for the past one year, has been evaluating locations in both Tamil Nadu and Gujarat to set up their first Rs 300-crore manufacturing plant in India. Amway has finalised Tamil Nadu.

"Incentives played a big role in this decision. Tamil Nadu has offered a refund of the capital investment made by the company over a period of eight years. This will be in form of a VAT refund," a senior official associated with the project said.

It is not just the incentives. "Amway is acquiring about 30 acres of land at Rs 5 lakh an acre. Gujarat government had offered the company a plot of the same size at Rs 1.3 crore an acre at Sanand near Ahmedabad," the official, who requested anonymity, added.

Similar was the case with Hyundai Motors, which was scouting for land in Gujarat. A company delegation had visited Dholera in 2010. But the company seems to have decided to expand within Tamil Nadu. Both Amway and Hyundai signed MoUs with the Tamil Nadu government a few days ago. "Cost of land and types of incentives are among the various parameters that influence the decision of the corporates while choosing a state. Gujarat is always blamed for offering sops to industries, but the fact is that other states are doing much more," says Bhagyesh Soneji, chairperson of Gujarat council of ASSOCHAM. The industry body recently came out with a report that put Gujarat on top of other states in attracting investments from private sector. Gujarat was followed by Orissa, Maharashtra and Andhra Pradesh.

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