Osamu Suzuki meets Gujarat CM Anandi Patel; government clears issues related to project

GANDHINAGAR: Japanese auto major Suzuki Motor Corp chief Osamu Suzuki today met Gujarat Chief Minister Anandi Patel, even as the state government cleared issues related to the company owning and investing at the upcoming plant in the state instead of its Indian arm, Maruti Suzuki.

Suzuki and Patel discussed SMC's proposed plant coming up at Hansalpur village of Ahmedabad district at an estimated investment of Rs 4,000 crore, according to an official statement.

He told Patel that the plant would be operational by May 2017, it added.

A senior government official said the state has sorted out all the issues pertaining to the transfer of ownership of the Gujarat plant to Suzuki from Maruti Suzuki India (MSI).

"At present, all the technical issues have been sorted out. Concession on VAT is not at all an issue, as we are going to give them concession," said state Additional Chief Secretary Finance Hasmukh Adhiya.

The plant was originally proposed to be set up Suzuki's Indian arm Maruti Suzuki India. It was, however, decided that the Japanese parent would own and invest there.

The move was opposed by institutional shareholders in Maruti Suzuki, forcing the company to seek minority shareholders approval after tweaking original proposals and the voting is expected to be held sometime in October.

It had also led to issues on the agreement with the state government as it was signed with MSI and not Suzuki. Such an investment by SMC would have to be considered a Foreign Direct Investment ( FDI), requiring the government to rework rules related to VAT concession to clear the proposal.

Earlier during June this year, MSI Chairman R C Bhargava had met Anandi Patel and Finance Minister Saurabh Patel to sort out the issues.

The plant was meant be MSI' first plant outside Haryana and third in the country after Gurgaon and Manesar. Now, it is is being proposed to be set up another wholly owned company of SMC -- Suzuki Motor Gujarat Pvt Ltd.

During June 2012, the state government allocated 700 acres of land to Maruti Suzuki India Ltd (MSIL) near Hansalpur to set up their plant. At that time, it was announced that MSIL will invest Rs 4,000 crore.