Official government resolution on how Gujarat was made "preferred destination" for Tatas

It is a matter of general knowledge that five years ago the Tata Motors was provided huge subsidies to shift its Nano plant from West Bengal to Gujarat, following a meeting between Gujarat chief minister Narendra Modi and top tycoon Ratan Tata. Ever since then, he has been hardselling Gujarat as the topmost investment destination for India. However, for long the Gujarat government kept a document which allowed the subsidy allowed subsidies a well-guarded secret. Prominent environmentalist Rohit Prajapati has now put the document in public domain:

Sanction of Loan to M/S Tata Motors Ltd. for Nano Car Project

Government of Gujarat, Industries and Mines Department
Resolution No. TMI./10/2008/51/1
Sachivalaya, Gandhinagar
Date:- 1/1/2009

Preamble:

For more than three decades, Gujarat is the preferred destination for investment in almost all industrial sectors, barring a few. As a result of the proactive role of the state government to attract investments, numbers of entrepreneurs / industrial houses are selecting the state as a destination of choice for investments in the sectors of Textile, Gems and Jewellery, Chemicals and Petrochemicals, Pharmaceuticals and Drugs, Steel, Cement, Engineering among others. However, the state is yet to attract good investment in the Automobile and auto ancillary sector. The auto sector has strong presence in other states like Maharashtra, Tamil Nadu and outskirts of Delhi state, where as Gujarat has only one car project. Though Gujarat has a strong engineering base and a number of engineering units, mainly in the MSME Sector, these are engaged in the supply of auto components.
Tata Group is one of India’s leading industrial houses and enjoys a reputation as a responsible corporate citizen even prior to independence. Tata Motors Limited (TML), which is part of the Tata group, is seeking to relocate some of its operations related to manufacturing plant for automobile products and components for the manufacture of the small car “Nano” from Singur in West Bengal. Given the Tata Group’s relationship with the State of Gujarat, its standing, both nationally and internationally, and the importance accorded to the Project by the industrial community of India, and the public in general, the State Government has come to the conclusion that in the present situation, it is desirable to have the said operations of the company in the State of Gujarat and do whatever is reasonably possible to provide a congenial environment and pro-active support for expeditions implementation of the Project and its operations.
Type of Loan:
Government of Gujarat (GoG) will provide fiscal incentives to TML in the form of a loan to TML at 0.1% simple interest per annum for amounts equal to the gross Value Added Tax (“VAT”) and Central Sales Tex (“CST”) payable to the GoG (or an equivalent Goods and Services Tax (“GAS”) or any other similar law for the levy of tax in Gujarat, on sale and purchase of goods, as and when introduced, on the sale of the Nano car and its parts and components from the date of commencement of the sale of the Nano car.
Quantum of Loan:
i. The maximum loan amount will be equal to: (a) 330% of the “TML Phase I Investment”; or (b) such amount as has been disbursed to TML by the govt. till the 20th year from the date of commencement of the sale of the “Nano”; whichever is lower. However overall amount of the loan shall in no case exceed the gross amount of tax paid to the GoG in the 20 year period under above mentioned laws.
ii. For the avoidance of doubt, it is made absolutely clear that the TML Phase I Investment shall be related only to the development, manufacture and sale of the Nano car, its components and related activities including the items set out in Schedule I.
iii. It will include the expenditure towards power supply i.e. 220 KV connection (having double circuit – feeding from two sources) up to the Project’s receiving station, as well as final power requirement of the Project in the range of 40-50 MVA. The project would require a separate 66 / 11 KV sub-station (having double circuit-feeding). All the above requirements will be made at the expense of TML, which would constitute a part of the TML Phase I investment. Gujarat, on sale and purchase of goods, as and when introduced), on the sale of the Nano car.
Repayment:
This loan will be repayable in monthly installments starting from the first month of 21st year (from the date of drawdown of such loan amount) of the commencement of first sale of the commencement of first sale of the “Nano”. The loan amount availed in the first month of the first year will be repaid in the first month of the 21st year along with interest and the loan amount availed in the second month of the year will be repaid in the second month of the 21st year along with interest and so on. The repayment will be along with the interest amount for that amount of the principal.
This is issued with the concurrence of Finance Department dated 6-12-2008 and dated 24-12-2008 on this department file of even number.

By order and in the name of the Governor of Gujarat.

P H Jagtap
Section Officer
Industries and Mines Department

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