The politics of a relocation

The decision to shift the proposed Foxconn-Vedanta silicon fabrication joint venture from Maharashtra to Gujarat, in the run-up to assembly elections in Gujarat, should surprise nobody. Since no MoU was signed with Maharashtra, there is no breach of contract either.

The project has been in the works since 2015 when Devendra Fadnavis, as Maharashtra chief minister, visited Taiwan. Land was identified at Talegaon near Pune, approved by the companies and over 70 farmers have been compensated at the rate of Rs 73 lakh per acre. Why wasn’t an MoU signed? There was nothing till this month to indicate that the companies were having second thoughts, so the late decision did come as a shock, concede bureaucrats in Maharashtra.

It became a political hot potato since Maharashtra has been losing out to Gujarat in manufacturing for the last 10 years. While Gujarat’s manufacturing base has grown considerably during this time, Tamil Nadu’s has stagnated and Maharashtra’s has actually declined, reveal records. Maharashtra is also aggrieved because several government offices and projects have also been shifted out of the state to Gujarat and in other states.

The Foxconn-Vedanata shift also came as a surprise because the corporate entity had as late as in June-July this year apparently requested the Maharashtra government to expedite cabinet approval and ensure ‘better alignment with the Centre’. Chief minister Eknath Shinde wrote back on July 26 and invited the company representatives on July 29 to sign an MOU. A high-powered committee met on July 15, and Shinde and Fadnavis claimed in the assembly on July 25-26 that the unit was being set up in the state. They reiterated the claim before the media. But in early September the company informed that the project has been relocated to Gujarat.

A war of words broke out between Fadnavis-Shinde on the one hand and the Thackerays on the other. Fadnavis blamed the MVA government for letting the project go while the Thackerays took a swipe at Shinde visiting 250 Ganapati mandals while the joint venture was being moved to Gujarat right under his nose.

Notably, the central government is learnt to have pledged 50 per cent subsidy to the $20 billion project. The whopping Rs 80,000 crore subsidy is in addition to the land and other sops and freebies offered by the Gujarat government. Does it qualify to be described as muft ki revadi is not clear though.

The business community and political circles in Mumbai say they are baffled. Several industries have already abandoned Dholera, the Prime Minister’s pet project, despite signing MoUs. Maharashtra Congress general secretary Sachin Sawant points out that Talegaon with its proximity to PuneBengaluru-Mumbai has advantages which Dholera does not in terms of ancillaries, an eco-system for electronics, skilled labour, supply chain vendors and water. An industrialist and member of the Deccan Chamber of Commerce, Industry and Agriculture concurs. The decision can only be explained in terms of political considerations.

Maharashtra lost out in the semi-conductor manufacturing race sometime in the 1970s. “The last time it lost out on a semiconductor unit was when a facility of a PSU-run semiconductor complex planned in Navi Mumbai went to Mohali in Punjab,” a Mumbai-based activist recalled.

A senior bureaucrat confided that Maharashtra government had held discussions with both Vedanta and Foxconn separately as early as in 2015. “The state government and Foxconn reached an agreement over an investment of $5 billion for a new electronics manufacturing complex. It was decided to first build a tiny mobile production facility in Navi Mumbai before opening a sizeable unit at Talegaon. They even rented a 2 lakh sq ft premises in Navi Mumbai along with office space at the World Trade Centre at Mumbai's Cuffe Parade,” he claimed. But for unknown reasons Foxconn took away the plant for manufacturing smartphones to Andhra Pradesh.

Farmers in Ambale, Nigade and Kalhat villages are upset at the FoxconnVedanta project shifting to Gujarat. The project was to come up at Talegaon Electronic and Engineering on 6,500 acres of land. The land acquisition has been on in full swing and 70 farmers have also received compensation at the rate of Rs 73 lakh per acre.

Mohan Gholap, Sarpanch of Ambale village recalled, “Officials from both the company and MIDC had come to the village to convince us about the importance of the project.” Deputy Sarpanch Hanumant Hande’s family owns 22 acres of farmland in the village. There were many farmers, he says, who were not willing to part with their land. But farmers like Sandeep Bhilare changed their mind when it was explained how the microprocessor chips and semi-conductors produced here could transform the economy and integrate the region with global activities.

They were looking forward to job opportunities, a better quality of life for the next generation, they said, and complained bitterly that it was a breach of trust—if not a breach of contract—by the company.