Mantralaya sources told The Financial Express that the automobile major, in a recent communique, has also requested that the benefits applicable under the scheme to "mega projects" with an investment exceeding Rs 750 crore be extended to the IDAM project.

The company has called for an assurance for quick acquisition of 575 acres (for IDAM, an ancillary park, transportation park and housing colony) and sell it to M&M with permission for using it for non-agricultural purposes.

M&M has demanded reduction in central sales tax from the present 4 per cent to 1 per cent with a view "to encouraging more inter-state sales and results in higher revenue to government." The company has demanded exemption from octroi paymentinstead of refund procedure. M&M has appealed to the state government for 50 per cent rebate on tariff for 10 years and exemption on duty levied on diesel generating sets and power purchased. The company wants an assurance from the government on provision of electric power, water, road construction in line with the project implementation. The present exemption on stamp duty must also be extended to unsecured borrowings and toll fee on inputs and finished goods should be exempted from payment for 18 years.

Interestingly, the company has also demanded reduction in octroi from 4 per cent to 1 per cent at Kandivli both for the auto and tractor division. The company has indicated that the octroi has been increased from 2 to 4 per cent in June this year. M&M has stressed the need for cut in octroi from 3 to 1 per cent at the existing Nashik unit and exemption from octroi at Igatpuri. Such an exemption was necessary, according to the company, as the Igatpuri plant was outside the octroi limits for the last 15years and was brought within the octroi limit very recently.

The company wants an exemption from payment of octroi on inter-unit transfers such as transfer of components/assemblies from Nashik to Kandivli or vice versa. Octroi was paid twice, once at Nashik and again at Kandivli. Sales tax deferral benefits for inter-unit transfers from Igatpuri and Nagpur should be made available.

The company has said that engines were manufactured at Igatpuri, which was a backward area and transferred to Kandivli. The company has demanded that sales tax deferral benefits be extended to the parts, components and sub-assemblies.INSIGHT
An interesting development

It would be interesting to see how much the Maharashtra government is willing to concede for retaining the project. Whatever the decision, the state cannot afford to pull all stops out in rolling the red carpet out for M&M. Simply for want of setting a precedent, which might cost the state exchequer dear in the long run.