Hero MotoCorp likely to sign MoU with AP on Tuesday

State offers 600 acres, 100% VAT waiver among other incentives to the manufacturing project proposed by the company

Hero MotoCorp Limited is likely to sign an MoU with the Andhra Pradesh government on Tuesday for setting up a motorcycle manufacturing plant in the state. The investment likely to be committed by the company is around Rs 2,200 crore, according to government sources.

During his recent visit to Delhi, the sources said, chief minister N Chandrababu Naidu succeeded in convincing Hero MotoCorp managing director and chief executive officer Pawan Munjal and his father Brij Mohan Munjal to choose AP as its manufacturing base for South India.

The state government has offered 600 acres of government land in Chittoor district adjoining the SriCity Industrial Park, at almost zero cost, besides 100 per cent exemption of value-added tax (VAT) on bikes made here. Power subsidy and other incentives available under the existing industrial policy were also being extended to the company, the sources told Business Standard.

Recent reports suggested the company had zeroed in on Karnataka among several other competing states to locate its plant for the South Indian market. Interestingly, the government of Telangana too was in the fray.

The decision was kept under wraps by the AP administration. Even the MoU was not circulated for vetting by either the finance or the law department, they said.

The Andhra Pradesh Cabinet on Monday reportedly discussed the incentives being offered to the company. However, information and public relations minister Palle Raghunath Reddy refused to share the details. Instead, he stated Naidu himself would announce the details in this regard on Tuesday.