The Telegraph
Since 1st March, 1999
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Bengal makes public Tata plant concessions
- Govt to give Rs 200-crore soft loan, cites competition from other states to justify sops

Calcutta, March 15: The Buddhadeb Bhattacharjee government will give the Tatas a soft loan of Rs 200 crore along with concessions on lease rent and value added tax (VAT) to set up their small-car project in Singur.

“Unless we give these concessions to the Tatas, other states will wean them away and that would be a big jolt to our efforts to effect a turnaround for Bengal. Two years hence, every MLA sitting in this House will be able to watch how the state’s economy would change with the advent of the Tatas,” industries minister Nirupam Sen told the Assembly today in the first detailed official disclosure of the terms of the land deal.

Participating in the debate on the governor’s address, Sen said the Tatas would invest Rs 1,700 crore in Singur, out of which Rs 1,200 crore would be for the mother plant and Rs 500 crore for the vendor park housing ancillaries.

Of the 997 acres of land acquired in Singur, the plant would come up on 645 acres for which the Tatas will not have to make any upfront payment, but only pay a lease rent that will be periodically revised (see chart).

The vendor park will come up on 290 acres, for which an upfront payment will be required and an annual lease rent of Rs 8,000 per acre charged. Sen did not specify the upfront amount, but said the total payment — also including the lease rent for both the mother plant and the vendor park — would exceed Rs 850 crore.

The West Bengal Industrial Development Corporation (WBIDC) will give a “soft term loan’’ of Rs 200 crore to Tata Motors on 1 per cent annual interest. Sen did not say when the loan amount, raised through market borrowings by the WBIDC, is to be repaid. “Government money is not being spent for this purpose. Profits of joint venture companies and sale of equity in state undertakings would be the means for providing subsidy to the car plant,” the minister said.

On the VAT concession, Sen said the “refund would not be as grants. They would take the shape of loans, carrying a very nominal interest rate”.

Sen justified the concessions, saying Uttarakhand had offered 100 per cent excise exemption to the Tatas while Himachal Pradesh was ready to exempt excise payment for 10 years and corporate tax for five years. He said that in the long run, the state would benefit “hugely’’ from the Tata project and earn Rs 400-450 crore a year in revenue.

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