Cabinet panel clears tax breaks for 4 big firms

The Cabinet Sub-Committee on Industries, headed by Chief Minister Siddaramaiah, on Thursday cleared certain tax breaks and incentives for four mega industries to boost investment in the State.

The primary issue discussed at the committee meeting was the possible tax breaks for Hero Corp, the two-wheeler automobile manufacturer, to ensure that it sets up its plant in Dharwad district. With Andhra Pradesh and Telangana wooing Hero Corp, the chief minister emphatically told the industries department that the State must provide more incentives to the company to stay in Karnataka. It is said that the automobile giant was not happy with certain tax breaks and incentives offered in the State.

On Wednesday, having noted that Hero Corp is likely to head to Andhra Pradesh, Siddaramaiah asked the industries department to increase tax breaks to the company. Accordingly, it was decided that Hero Corp will be offered a 70 per cent VAT loan on its local sales.

The facility is basically offered to new industry units, wherein the company can procure interest-free loans against the VAT collected by the government from the company. The State had previously offered a VAT loan of 25 to 30 per cent.

Revenue Minister V Sreenivas Prasad told reporters that apart from VAT loans, other tax breaks beneficial to the company are also being provided. Hero Corp is expected to set up its unit in Dharwad and provide employment to at least 5,000 people in the first phase.

The other major issue discussed at the cabinet sub-committee meeting was the extension of time sought by Tata Motors to complete its project in Dharwad. The automobile major is setting up a plant to manufacture small, large and medium scale buses. The company has sought an extension of three years to complete its ongoing project approved in 2007.

JBF Petrochemicals in Mangalore and Rajashree Cements, for its new unit in Gulbarga, have also received further tax breaks.

The minister said that the chief minister has planned a policy wherein all sorts of breaks on entry tax, VAT, service tax, etc., will be encouraged to bring more investment. “The policy will encourage more industries in the backward districts,” said Prasad.

Dalmia Cements has been denied permission to set up a new unit in the State. Siddaramaiah has decided against the proposal, but has agreed to permit its expansion plans in its present location of Yadwad village in Gokak taluk, Belgaum district. The reasons for declining permission was not explained by the minister.

While JBF is looking at an investment of Rs 5,444 crore, Tata Motors is investing Rs 3,500 crore.

Both the companies are investing in two phases. Rajashree Cements, an unit of Aditya Birla group, is looking to invest Rs 3,000 crore. Hero Corporation is likely to invest Rs 1,500 crore in its proposed Dharwad plant.

The four companies are investing at least Rs 13,500 crore in the State.