Ad Here  
August
September
October
November
December
January
 
 
Dr C Rangarajan returns to Chennai Align crops to agro climate endowments… Cutting the nose to spite the face Naidu’s return augurs well for Seemandhra Muffled voices for merit… Strengthen the base... Banning booze... For whom the MIDS bell tolls? Gay abandon in pricing More tributes to GR Moily’s bold thrust Marketing expert Balagopal is no more Cleaning Ganga – relocate tanneries and install electric crematoria GM Technology at last! The Swadeshi Trump A proud Madrasi Adapt Vajpayee dinner diplomacy Remembering Indira Sivasailam... Vibrant Gujarat Quality education through the PPP mode Which side are you, Montek? TELANGANA at last…BUT Tatas moving out of urea production... PPP mode for upgrading Corporation Hospitals Build close rapport with business leaders Welcome focus on core competence Welcome thrust on trade in Modi’s foreign visits... The why of tax incentives TN accounts for the largest recruits by the IT sector Sweeter prospects for sugar SoA @ 80 No engine for this car Waning interest in public discussions… Telangana in top gear… Increasing non co-operation of state leaders Online not in line with brick and mortar businesses... Bihar elections - the Rajaji formula worked Robber barons everywhere The Jan Dhan bonanza All eyes on Sankara Nethralaya This scant respect for Law Delhi Chalo... A glass full of corruption When small is no larger beautiful.. CIPET hqrs to stay at Guindy – for the present? Tough task taking states together Limit foreign borrowings to hi-tech, export potential projects... Permanent secretariat for TN GIM Not just in-laws (and outlaws); they’ve renowned academics at the helm! The ‘Jayanthi Tax.’ Discoms deserve better… Come elections, come advertisements... Quality silica from Neyveli London, London Narayan A C Muthiah – his munificent bequeaths to science The power-full Hindujas No mega rail project for Tamil Nadu Tax agriculture Tribute – UCAL Selvan… Alexa – Talking Wikipedia L&T: focus on infrastructure and more infrastructure… R Sridhar steps down as CEO of Shriram Capital Plummeting profits of PSBs S Ramanathan – a versatile musician, musicologist Modi and the lady Contrarian cousins Tatas moving out of urea production... The star of Spencers is no more Cement prices continue to rise… Where a state respects its litterateurs… Diamond jubilee of Egmore Samskrt School GNS - 100: our first subscriber Demise of a media baron... Road development slows down Fortune 500 review When the President was rendered homeless… Solar, solar everywhere … Shale gas and its shallow future Kudos to NDTV... Things happen by accident and not by design... Scientists urged to take up farmer-oriented research Parliament in paralysis... Five star activism stalls development activity The nuclear option He saved millions from starvation... A Grand Finale for SN’s MS centenary at the US… The rise and fall of Annamalai University Varuna (rain) in 2015; Vaayu (air) in 2016. Chennai devastated Of course, Gujarat is vibrant Kulandai was a giant When online building permits work…. Mersal magnified ONGC at KG Basin Another Indian music maestro at the UN Convulsions in The Hindu Medical costs hit the roof... Lesson from Chandrababu Naidu A welcome initiative by the judiciary Maximising the micro pricing … Building loyalty through the stomach Tihar, Puzhal not different from Parappana Agrahara Rahman at CIC Revive development banks... Breaththrough in malaria control Tribute – M V Murugappan When nations steal growth from one another… Godspeed, Chief Minister JJ EVM is tamper-proof A Grand Finale for SN’s MS centenary at the US… Eternal support for capitalisation of PS banks Welcome changes that testify to Jayalalithaa’s return to health Editor's Says Wanted: a second airport for Chennai Valli, they are more marginalised A more liberated TN… The Ports’ Pasha expands into Tamil Nadu More heat than light West Bengal: mindless malignancy The Gulf aviation boom Sweet news for TN sugar mills The sea- saw battle continues... Reliance’s TV – 18 ready to launch Tamil News Channel Funding the un-funded There was flood of milk. Reason: no milk commissioner! Fall in crude prices help in oil sector reform A professional at the helm of IRDA... Padma Bhushan for A Ramakrishna Measuring roof tops in terms of KW/MW Focus on quality of power - its only around 170-180V Silver Years of Madras Musings Wise Presidents Making ‘my Amaravati’... Polls and promises B H Kothari - a tribute Fortune for Indian Airlines Sri Lanka votes for change Poor representation for Kerala and TN in Cabinet Editor's Notes The balancing act Lalu’s envy, India’s pride Boy, can you beat these? Readers' Mail Revving up the manufacturing sector The few handicaps... Mu Sigma – is no more MHC should not return to its old indisciplined ways Intellectual of rare qualities Insurance companies bleeding, yet no decision on increasing FDI limit! Why land prices zoom in TN? Welcome GST For whom the bell tolls? Nuclear power at the nucleus An enemy’s enemy is a friend F C Kohli - his concerns all embracing No Maha Koottani in TN... Odisha: spectacular win by Naveen Patnaik A friendly business group Shaming of Tamils by Tamil farmers at Delhi More Shakthi to Das’ elbow TN – agglomerate land holdings without alienating ownership New IT products of Ramco in the pipeline… Adharma of opposition politics Chennai and Kolkata miss opportunity to grow as Delhi and Mumbai Towards speedy justice TGS- The king storyteller Engineering seats go abegging Noble nonagenarians... A yen for wastage… …and of a popular trade leader Poor quality of university VCs A rich pool of talent not utilised…. TIAM turns a full cycle Fuel for thought Liberal imports idling indigenous capacities Should we change the official year? Russi Mody – a tribute Airlines in India: cost and space Modi storms Silicon Valley Gas is the way forward Where is Rajaji? Solar thermal shines… CII projects higher growth… Why this malaise in medical education? Secularism and anti-Hinduism Delhi is distant Roaring Ro-Ro facility Tribute Inflation: are we emulating Argentina and Brazil? More Shakti to resource mobilisation... Bihar – Nitish Kumar adopts the Lalu model An informal presentation - analytical, forward locking... The brown list of Venkitaramanan Like Hinduism: many paths to reach God... Pharma – overdose of copying Rs.1600 crore paper board plant of TNPL Auto components surge… Air Asia India will set new benchmarks for budget travel Shipping woes of Chennai companies TN-leverage strength of BHEL, NLC... Shanti and Sadhana through Music IPL - no surprise this scam Infrastructure funding – lessons learnt CSR and CMI: promise of another Srinivasan Ramanujan... Recognition to role of NBFCs.... China invests in India EEC at the National Media Centre Excel Generators provide the vital back-up Make standards certification mandatory... Land reclamation from sea appears cheaper! Haul over the coal CRS, a jewel among managers, is no more. Put expensive assets created to use... S V Raju – a ‘good’ true liberal Protest masters... L&T- the specialty of special purpose vehicles WTO Meet: resolved to meet again Colour-Chem’s colourful KRVS Multi-faceted Venkat An inexplicable neglect Small units prefers to remain small... Streamlining mandatory third party cover When TN politicians can emulate Kerala's Naidu will soon build a new Hyderabad Music happens The rise and rise of KCP Delhi returns to BJP The ‘Ayyo-yes’ is no more IPL type auction for VCs? Preserving for the future When Ratan Tata visited SRM Computation of GDP – conundrums continue IAS invades NDDB... Return to king coal for urea... Tribute – Manikam Ramaswami How Air-India loses customs... Paytm karo... He continues the focus on social amelioration Delhi is distant… Kinetic Karnataka A think tank for Chennai to the lack of interest on the part of these to focus on original research. This despite the much lower costs of such research in India. The industry which thrived on the protection of a closed economy and the advantage of a vast domestic market, has failed to organise its evolution on healthy lines Don’t seem to feel the pulse… Whistle-Stop Tour of Raghuram Rajan PC’s preference for professionals
 
The why of tax incentives

At the height of the 2014 election campaign the Congress party as also the Aam Aadmi Party (AAP) levelled sharp criticism against the government of Gujarat extending huge tax concessions to industrial leaders like Gautam Adani. Like Dhirubhai Ambani, Adani built a huge empire, focusing on infrastructure. A major criticism of Chief Minister Modi was his offering land at very low prices. Gautam Adani responded through a few television interviews that it was nothing unusual. He pointed to several other state governments offering him even more attractive prices for land, to set up projects in their states.

Across the world states offer various incentives to attract investments. These range from low price for land and liberal tax incentives. In the US, for instance, several states including Houston, New Hampshire and Florida, do not levy sales tax. This is offered as an incentive for attracting industries to these states.

 

Ford Motor India Plant

This has been practised widely in several industrially developed states in India as well. In the 1990s, the AIADMK government headed by J Jayalalithaa attracted large investments by DuPont and Ford Motor Company to set up their factories in Tamil Nadu.

States also vied with each other in extending other concessions of various sorts. Tamil Nadu, for instance, offered Ford Motor Co. the funding of sales tax for 14 years at no interest. That meant all the sales tax revenues that were payable to the state for 14 years could be accumulated and used for capital and other expenditure. This meant, in several cases garnering, much larger funds than the monies invested on the plant and machinery at the starting point. Hyundai Motor Company and other later entrants also made full use of such practices.

Such large projects brought with them large employment not just in the main plant but also in dozens of component manufacturers’ in the services sector and in triggering more such investments in mega projects. Automobile companies that have set up shop this way have developed Tamil Nadu as a hub for production of specific brands of cars, especially in the smaller capacities, for export including to developed countries. Last year Hyundai is estimated to have exported 200,000 cars, Nissan accounted for a similar large volume of exports. Ford is estimated to target an export of around 100,000 cars and the list continues. Could these remarkable changes, especially the image of the state as a hub for production of automobiles of high quality and technology and the transfer of vital management practices have happened, but for the liberal incentives offered in the initial stage?

Of course, there is the valid criticism that states indulge in  fierce bottomless competition to attract investments  through a war of incentives. There is the criticism that the incentives offered do not match with the results. But this question can always be debated in any business and policy decisions as certain element of risk of failure is inherent in these. But overall, such incentives have worked well. Maharashtra in initial years built its vast industrial base on such active advocacy. Haryana followed suit soon and even Noida in UP offers such incentives in a big way. Tamil Nadu, Karnataka and Andhra Pradesh did this subsequently and today this has become a well-established trend.

As mentioned earlier, this is a global practice. Look, for instance, the shifting of automobile production from Detroit which held sway over this industry for several decades in the 20th century, making downtown Detroit a ghost town today.

Author :
Reported On :
Sector :
Shoulder :
RELATED NEWS
ABOUT IE
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com