Due diligence amid corporate defaults delaying projects of Rs 250 bn in UP

Yogi government had netted investment proposals of Rs 4.68 trillion at Investors Summit

In the backdrop of corporate default news emerging thick and fast, the Yogi Adityanath government is exercising caution and due diligence of private investment proposals netted during the UP Investors Summit 2018.

The due diligence coupled with preliminary groundwork by the industrial department has delayed the rollout of projects worth almost Rs 250 billion planned for this month, as also announced by the CM himself on March 19 when he completed his first year in office.

At the Summit on February 21-22, the state had signed memorandums of understanding (MoUs) with private and public sector companies for investment proposals worth Rs 4.68 trillion. Prime Minister Narendra Modi had inaugurated the high octane event in the presence of top corporate captains and business houses.

Later, the government had planned to rollout projects worth Rs 250 billion each during March and April respectively and follow up with other MoUs in phases. However with due diligence and preparations still underway, projects worth Rs 350 billion are likely to be launched by Adityanath in the first half of April, sources claimed.

To ensure maximum fruition of proposals, UP Infrastructure and Industrial Development Commissioner (IIDC) Anup Chandra Pandey had earlier directed nodal officers to examine all the MoUs for the respective company’s debt profile, financial status, turnover, business verticals etc, so that only serious contenders were in fray and there were no glitches later.

Apart from due diligence, the government also wants to complete all the formalities pertaining to the availability of land, clearances etc to avoid delays going forward, which could then subject the Adityanath dispensation to cornering by the opposition, especially in run up to the high stake 2019 Lok Sabha poll.

Meanwhile, Pandey told Business Standard the industry department was gearing up for the rollout and the exact date would primarily depend upon the availability of the CM’s dates. “We have sought the time of the CM for the launch ceremony.”

The government has identified nine priority sectors to speed up the proposed investments. These sectors are housing, urban development, horticulture and food processing, IT and electronics, energy, solar energy, industrial development, tourism and information.

The biggest takeaway of the Investors Summit was the announcement of defence manufacturing cluster in the arid zone of Bundelkhand, which is estimated to attract direct investment of Rs 200 billion and generate 3.3 million jobs. The cluster would span several districts in its catchment, including Aligarh, Agra, Jhansi, Kanpur, Lucknow and Chitrakoot.

The Centre has pitched UP for substituting domestic arms import bill. India is the world’s largest military hardware importer and figures among the top five military spenders. Between 2012 and 2016, India accounted for 13% of global arms imports. India is projected to incur 250 billion US dollars on defence procurement over the next decade.