Maharashtra offers to compensate for import duty to get Foxconn to invest in state

Maharashtra government has offered to compensate the 11.5% import duty levied by the centre on Foxconn, if they agree to fund the setting up of a manufacturing facility in Maharashtra. Maharashtra CM Devendra Fadnavis had managed to get the Taiwanese firm to commit to an investment of $5 billion in the state last year. The company, however, has been reluctant to fund the setting up of a manufacturing facility anywhere in India unless the government agrees to charge import duties cheaper than the duties in China.

The Economic Times today reported that Maharashtra state government officials met senior officials from Foxconn on Tuesday, and have proposed compensating Foxconn for the import duty imposed by the centre either by way of a grant or a subsidy to offset the company’s losses if it is charged import duty.

American technology company, Apple, has also asked for similar duty exemptions and tax concessions to manufacture their products in India. Foxconn has been closely following the developments, and sources in the Maharashtra government have said that if the inter-ministerial panel formed by the central government to look into Apple’s concerns heeds to the company’s concerns and waives off duty and offers tax exemptions, then even Foxconn stands to gain. As there haven’t been any significant developments on that front, the Maharashtra government has proposed to compensate Foxconn for the 11.5% import duty levied on it.

Speaking to The Economic Times about concerns around whether Maharashtra can give such concessions under GST (Goods and Services Tax), Bipin Sapra, an indirect tax expert at consulting firm EY said, “From a manufacturing point of view, the revenue generated can be incentivised to state GST, but only for the products consumed within the state. If they think that manufacturing activity is generating employment opportunity and other benefits to the state, they can offer other incentives, but for that they will have to dip into their own pockets.”

[Source: The Economic Times]

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