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Foxconn's much-touted investment plan in Maharashtra may have fallen victim to strained India-China relations

In August 2015, the Maharashtra government's announcement on New Taipei-based electronics giant Foxconn agreeing to invest in the state had generated much enthusiasm. However, the much-touted proposed investment is unlikely to become a reality.

Speaking to Firstpost, state industries minister Subash Desai said, "There has been no progress on the issue of the investment by Foxconn in the state. There has been no communication from both sides on the matter."

When asked about the possible reason for the stalled communication between the Maharashtra state government and the corporate firm, Desai said, "One of the reasons why the company may be abandoning its plan could be unhealthy relations between India and China."

Foxconn had planned to set up several manufacturing facilities for a number of products, including iPhones and tablets. In May 2016, it was said to be scouting for land to set up its manufacturing plant.

Maharashtra industries minister Subhash Desai with Chief Minister Devendra Fadnavis. News18

Maharashtra industries minister Subhash Desai with Chief Minister Devendra Fadnavis. News18

Desai said that Foxconn wanted a plot for the plant near the airport and that the government had suggested a few plots near Talegaon, Khopoli and Khalapur. "However, no progress has been made in this regard. We are a waiting for a reply from Foxconn," he said.

The Taiwan-based company had signed a memorandum of understanding (MoU) with the Devendra Fadnavis-led government in August 2015 and had offered an investment of $5 billion. Fadnavis had said earlier that Foxconn will create the direct employment of 50,000 people through the MoU.

A senior official told Firstpost that the MoU is on the verge of being cancelled. "We are planning to give the proposed site to another investor. Foxconn was a dream project under Make in Maharashtra. It is sad that after two years, it remains on paper."

Subhash Desai further said that some other companies in the electronic sector are ready to invest in the state. "Presently, investment from 44 new industries from the electronics sector is on the cards. We hope that these investments will generate Rs 30,400 crore, will create about 1 lakh employment opportunities. However, it is important to remember that it takes at least three to five years for any industry to settle down."

In October last year, Firstpost had reported that Foxconn was likely to back out of its investment in the state. At the time, the absence of customers was believed to be a reason for this. Apurva Chandra Principal secretary for Maharashtra's Department of Industry, Energy and Labour had then said, "We do not think this is disappointing as yet as we would like to give them some more time before coming to a decision."

The Maharashtra government has recently completed three years in power and a major focus for it was augmenting investment in the state. Devendra Fadnavis, in his address during the Make In India Week in Mumbai in February 2016, had said that a task force, headed by the state industry minister, would be set up to ensure that the MoUs signed during the programme get translated into actual investments. Desai said that while MoUs worth Rs 8 lakh crore were made in February, investments of about 4 lakh crore have had concrete progress. However, he did not give details about the investment of Rs 4 lakh crore.

The Opposition has also questioned the government over the status of the investment in the past. Congress leader and former chief minister Ashok Chavan had said in October 2016 that he had expressed apprehensions that the MoU would be controversial during the company's visit to Maharashtra, and that he was proven right.

"During the Congress rule, we secured more foreign investments without resorting to jumlas of this kind," Chavan had said.

Updated Date: Nov 13, 2017 22:21 PM

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