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Jharkhand dents Mittal demands |
| Suveen K Sinha & Surajeet Das Gupta / New Delhi October 7, 2005 |
| Final MoU to contain timeframe instead of sought concessions. | |
| The memorandum of understanding for setting up a 12-million-tonne steel plant in Jharkhand, to be signed on Saturday by the state government and Mittal Steel Company, will incorporate hardly any of the exemptions sought by the world's largest steel maker. | |
| Instead, it will set out a specific schedule for the project. Mittal Steel has not committed to a deadline so far and has proposed that project implementation should be revised periodically before meetings of a facilitation committee. | |
| "The concessions (the ones that the Mittals are asking for) are not acceptable. In the final MoU, there will be none of the concessions (that were there in the draft MoU). We have also set a timeframe. The first phase must be completed in 48-54 months. The same will apply to the second phase," a Jharkhand government official told Business Standard today. | |
| The MoU will neither grant special economic zone (SEZ) status to the plant nor allocate specific iron ore mines, two key clauses in the draft MoU drawn up in August. | |
| "The only thing we have said is that we may consider SEZ status at a later date for the steel plant. Not for mining in any case," said the official. | |
| Mittal Steel has agreed to the revisions. "We have made it simple. We only want incentives that are given to any mega-project in step with the industrial policy of Jharkhand and as permitted by the fiscal rules in India," said Mittal Steel's Executive Vice-President (Finance) and Corporate Treasurer Sudhir Maheshwari. This was not a climbdown, he added. "Any agreement is reached after a lot of give and take." | |
| Some of the key incentives sought by the company, apart from SEZ status, were exemption from all direct taxes (including the minimum alternate tax), Customs duty on import of capital goods, sales tax on royalty payments, service tax on import of technology, the works contract tax, and the duty on electricity produced or purchased. | |
| The draft MoU had also talked of reimbursing half of Mittal Steel's contribution to the employees provident fund and employees state insurance, subsidies on interest, on capital investment, and on costs of energy-saving equipment and machines. | |
| The concessions involve the Centre and the state government and have been questioned by the steel industry, particularly at a time when the Orissa government's deal with South Korea's Posco is in the headlines. According to industry players, had Mittal Steel been granted the concessions, the Centre and the state would have lost thousands of crores of rupees in revenue. | |
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