Gujarat to rework SSA with Maruti for Mehsana plant

Written by fe Bureau | Ahmedabad | Updated: Jun 5 2014, 07:23am hrs
The Gujarat government on Wednesday agreed to rework the state support agreement (SSA) with Maruti Suzuki India (MSIL) for its upcoming facility in the state, which would be owned and built by its parent firm, Suzuki Motor Co of Japan.

Company officials and experts will sit and work out the changes in the agreement with the state and we have given an in-principle agreement to support Maruti. They need to resolve the technical issues and the Gujarat government is willing to accept the changes that will be made. CM Anandiben Patel is keen on ensuring smooth implementation of the agreement, said Gujarat finance minister Saurabh Patel.

Maruti Suzuki officials met the CM, the state finance minister other government officials to work out the details for the SSA, which MSIL had signed in 2011 for establishing a car manufacturing facility in Mehsana district.

Earlier in January, it was decided that it would be a Suzuki facility, which would make vehicles exclusively for Maruti. Accordingly, the SSA would require to be rectified.

We are working on the technicalities on how to work out the incentives within the purview of the two-company model. We have been assured full support by the Gujarat CM, said RC Bhargava, chairman, Maruti Suzuki. This is important because there is no precedent of the two-company model whereby a manufacturing company is considered different from the marketing and selling company. VAT in states like Gujarat and Maharashtra is initially borne by the manufacturer, having its own marketing and selling vertical, which is then passed on to the dealer and, finally, to the customer.

Downplaying the claims of a dispute between the company and the government over the reworking of the SSA, Bhargava added, There is no dispute between the company and the government. We just need legal advisors and experts to examine the current situation and come up with a solution, added Bhargava.

Though he did not explicitly mention it, he indicated that the VAT and other taxation related issues may be addressed. If the market conditions are favourable, we are even looking at upping the investment in future.