Jolted by the loss of a proposed Rs4,000 crore investment by Mahindra and Mahindra, Renault SA and Nissan Motor Co. that went Tamil Nadu’s way, Maharashtra—which has billed Pune as India’s auto capital—is rushing to acquire additional land to help attract other projects.
The state government is now fast-tracking land acquisition activity, especially in the Chakan-Talegon industrial belt near Pune, which has already seen investments of an estimated Rs7,000 crore in the last six-eight months by a line-up of auto industry heavyweights, including General Motors, Volkswagen, Bajaj Auto and DaimlerChrysler.
People familiar with the matter said that about 1,200 hectares of land will be acquired by the state in this belt to meet the demand from an array of companies looking to set up auto-related projects.
One of those said to be waiting in the line is Hyundai Heavy Industries, scouting for at least 50 acres of land to locate its construction equipment machinery plant. UK’s JC Bamford Excavators is also believed to have applied for additional land to expand its manufacturing plant at Talegaon.
Additional land acquistion of just under 3,000 hectares is also under way in other parts of the Pune region, including in Ranjangaon, where Fiat and Tata Motors have announced their joint venture to manufacture passenger cars.
Maharashtra’s problem is compounded by the fact that most investors insist on locating in what is developing as a hub for large manufacturing and automobile industries: the Chakan-Talegaon belt which is close to the high-speed Mumbai-Pune expressway and provides easy access to the Jawaharlal Nehru Port.
“Availability of land is a big problem just now and we don’t know how to accommodate the requests that come in from potential investors,” Maharashtra’s industry minister Ashok Chavan said in a telephone interview recently.
Acquiring land won’t be easy if past experience is any indication. The Maharashtra Industrial Development Corp. has burnt its fingers in the past with land acquisition in the Pune region when villagers raised vociferous protests against land being acquired for expanding the software technology park here.
“Land acquisition has now become an extremely sensitive issue with the controversy over SEZs, etc., and I don’t want to comment on it,” said MIDC chief executive Rajiv Jalota in a telephone interview.
The state government is also not placing all its bets on that one region as it wants to make sure that potential investors don’t shop elsewhere.
“If land acquisition becomes a problem, we will shift our focus from Pune to other places such as Kolhapur, Nashik, Satara and Sangli,” said Chavan. And “car makers such as Skoda have already invested in Aurangabad and others in Nashik,” Jalota pointed out.
Jalota maintains he is not worried the state will lose out on investments to other states.
“People are lining up for investing in the state since we offer the best in terms of infrastructure, procedural efficiency and transparency of transaction. We do not have land just now to offer, but over the next few months, we hope to have enough land in our possession,” he added.
With local elections around the corner, there appears to be a reluctance to make a big deal out of potential land acquisitions. Meanwhile, some projects that have been announced haven’t yet disclosed where they might end up being located.
Officials of Mahindra & Mahindra, who recently announced their new truck venture in Pune in collaboration with International Truck and Engine Corp. (ITEA), couldn’t disclose the exact location of their proposed plant.
Asked specifically about the land allotted to the Mahindra-ITEC truck venture, Jalota said the joint venture has not been allotted any land yet. “But we are committed to providing them land,” he said.