Indo Rama Sets Pre-Conditions For Locating Pta Project In Andhra

The Rs 3,600-crore Indo Rama group has set three pre-conditions for locating their Rs 1,400-crore purified terephthalic acid (PTA) project at Visakhapatnam. All the three issues fall within the purview of the Centre, but since the ruling party in Andhra Pradesh is a constituent of the ruling United Front (UF) and Chief Minister Chandrababu Naidu is the convenor of the Fronts steering committee, Indo Rama expects the state government to use its political clout with the Centre and get the demands conceded.

The three conditions put forth by the company are:

Abolition of customs duty as well as domestic tariff on capital goods;

 

Duty-free imports of raw material, at least during the first two or three years; and

Tax holiday, at least during the first five years of operation.

According to the state industry secretary Sheel Bhide, the suggestions of Indo Rama are being considered by the state government.

It is a major investment, running to more than Rs 1,400 crore. We are keen that the plant should come up within Andhra Pradesh. We are examining their request from this point of view, Bhide told Business Standard.

The industry secretary said that apart from the three requests falling within the purview of the Centre, Indo Rama has also sought a special package of incentives, over and above the normal package, since the proposed PTA plant will be a capital-intensive, low-turnover project.

We have agreed in principle to this request and are working out the package in consultation with the investor, Bhide said.

According to P S Bhatnagar, president of the petrochemicals division of Indo Rama Synthetics (India) Ltd, it was necessary for the Centre to give such concessions to enable investors to bring down the capital costs.

Bhatnagar said that such incentives were being offered by most of the neighbouring countries, including Thailand, Indonesia, Malaysia and Bangladesh - the countries where Indo Rama has sizable presence in textiles, polyesters and agro-chemicals.

We are of the firm opinion that if such a package is made available by the Central government, India will meet its target of foreign direct investment of $20 billion, Bhatnagar said.

According to him, the present rate of import tariff on capital goods at 39.5 per cent, including counterveiling duty, as well as domestic tariff of 10 per cent was very high. Units likely to be established now become operational only after three years when their product will have to compete with cheaper imports due to further lowering of tariff, making them uncompetitive, he pointed out.

Bhatnagar said that two locations, Visakhapatnam in Andhra Pradesh and Mangalore/Karwar in Karnataka, have been shortlisted after detailed study of locational advantages of half a dozen sites. Between the two, Visakhapatnam appears as a probable site for several reasons, he said.

He said that 2,600 acres of land was readily available at Visakhapatnam in the proximity of the national highway, port and airport with good railway link with Calcutta and Chennai. Water, power and effluent treatment facilities were also readily available, he added.

Apart from Visakhapatnam port, two more ports, Gangavaram and Muthyalampalam, are being planned by the state government for development. This will remove congestion in Visakhapatnam port and help in export-import.