Mumbai: State government wants Foxconn to invest in Maharashtra

All attempts have been made by the Maharashtra government to get the manufacturing giant Foxconn to invest in Maharashtra and in one such attempt the state government officials met the senior officials of Foxconn and have offered to compensate 11.5% import duty either by grant or a subsidy to offset the losses suffered by the company in the case if the company is charged with import duty.

Foxconn was not comfortable in funding the set up of a manufacturing facility in India unless the import duties imposed in India were cheaper than those in China and hence the state government was in a way forced to make the offer and give the assurance to the manufacturing giant Foxconn. American technology company Apple also wanted to manufacture in India and hence made similar offers of duty exemptions and tax concessions to manufacture their products in India. The inter-ministerial panel was formed by the central government to look into matters such as these. Had the inter-ministerial panel paid heed to Apple’s offer and concern and waived off the duty or offered tax exemptions it would have benefitted Foxconn as well.

However, there are questions as to whether Maharashtra can give such concessions under GST. “From a manufacturing point of view, the revenue generated can be incentivised to state GST, but only for the products consumed within the state. If they think that manufacturing activity is generating employment opportunity and other benefits to the state, they can offer other incentives, but for that they will have to dip into their own pockets, “said Bipin Sapra, an indirect tax expert at consulting firm EY told the Economic Times.

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