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Maharashtra's 160% concession for projects in backward areas

The Shiv Sena-Bharatiya Janata Party alliance government in Maharashtra has offered sales tax concession which will amount to 160 per cent on invested capital for mega projects set up in Marathwada and Vidarbha. The two regions, located in northcentral and east Maharashtra, are the backward zones of the state. A decision on the proposal is expected soon after a formal approval by the state cabinet.

The limit on the concessions offered earlier has been increased to attract big industries to the region and help develop rural areas.

Deputy Chief Minister Gopinath Munde -- who belongs to the Marathwada region -- was instrumental in wooing Czech automobile company Skoda to set up its plant at Shendri, an industrial belt near Aurangabad in Marathwada.

However, Munde's bid to woo Fiat to a backward region came a cropper when the latter opted for Ranjangaon near Pune. The proposal to offer concessions on sales tax is an effort to influence Skoda's decision, which some reports had claimed was not interested in Shendri.

Munde is extremely keen to bring Skoda to Shendri. On a visit to Czech recently, Munde and his delegation made a pitch for Aurangabad. The auto major Skoda has asked for two months time to make a decision even as the alliance government offered massive sops for mega projects in the region.

The concession on sales tax is linked to the capital investment irrespective of zonal restrictions. The concessions offered will differ as per the category -- small-scale, large-scale, and mega projects (envisaging an investment over Rs 10 billion).

The regions are split into Zone D and Zone R. The concessions offered are for a time-limit of 11 years for Zone D and 15 years for Zone R. As per the proposed scheme, mega projects in zone R will save 160 per cent in sales tax on the invested capital over a period of 20 years. This means that if Skoda invests Rs 10 billion, as planned, it will save Rs 16 billion over a period of 20 years.

Compiled and translated from the Marathi press by Prasanna Zore