Jharkhand: The Driver Of Nation’s Progress
As India becomes increasingly critical to global car manufacturers’ success, Jharkhand is rapidly gaining recognition for its auto and auto components industry.
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As India becomes increasingly critical to global car manufacturers’ success, Jharkhand is rapidly gaining recognition for its auto and auto components industry. The sector employs around 70,000 people in the state and contributes roughly 7% to India’s GDP, with scope for exponential growth.
Strong industrial demand, sectoral reform and business-friendly policies in the auto and auto ancillaries sectors have the potential to put Jharkhand firmly in the driver’s seat of India’s $38.5 billion auto industry.
Jharkhand has more than 800 auto ancillary and component factories that roll out everything from suspension and braking parts to precision gear. To make Jharkhand the high-tech leader of an increasingly competitive domestic auto manufacturing market, the government has outlined its strategy to aggressively pursue economic growth.
The 2016 Automobile and Auto Component Policy encompasses commercial and passenger vehicles, as well as vehicles for mining, construction, agriculture, defence, railway. With this vision, the administration has zeroed in on key areas in which Jharkhand can emerge as a primary contributor to the Make in India initiative.
The multi-pronged approach endeavours to make Jharkhand a preferred destination for auto and auto component players in eastern India, create jobs, build auto clusters and mega projects, promote entrepreneurship, improve infrastructure, boost skilled labour and encourage cross-sector investment and partnership.
Advantage Jharkhand
Jharkhand’s auto industry is closely linked to its thriving mining and metals sector, which has always been attractive for its capacity to produce the raw materials needed for auto production, such as steel. Jharkhand produces about 25% of all steel made in India, with Tata Steel producing multiple types of auto-grade steel in the state. As well, the mining industry depends on industrial vehicles and equipment such as excavators and cranes, which can be locally made.
As one of Asia’s biggest vehicle manufacturing hubs, Jharkhand already has numerous financial incentives for companies wanting to do business there, in addition to excellent infrastructure and a reliable electricity supply. It also ranks seventh nationally in terms of ease of doing business and first in India for labour reforms and inspection-related compliance.
The government has gone one step further by providing a capital subsidy of 50% to developers of auto clusters, auto vendor parks or automotive suppliers manufacturing centres, for fixed capital investments up to a maximum of 20 crores.
In addition, auto and auto component manufacturing plants will receive a 100% concession on central sales tax for 10 years, and the government will allow a net VAT concession on either the sale of finished goods for 10 years, or 150% of capital expenditure spent in the first seven years - whichever comes first.
Bolstering Innovation
Adityapur and Jamshedpur already anchor Jharkhand’s auto sector, but the government’s goal is to turn them into industrial juggernauts.
A new auto vendor park is on the anvil in Jamshedpur, which will be equipped with common technology and facilities, such as a world-class testing centre and design lab. These resources will be accessible to all auto components makers.
A planned Adityapur cluster will produce two- and three-wheelers, passenger vehicles, commercial vehicles, auto parts and more. It will also serve as a central point for manufacturing electronic auto components.
The administration is open to developing these new projects through a joint venture or private sector investment, and may grant up to 60% of the cost for any new testing facilities in Adityapur.
Home To Indian Auto Giants
With a cost-effective workforce and proximity to raw materials, the business environment in Jharkhand has long been hospitable to some of India’s most prominent auto majors:
Tata Motors
Tata Motors’ decision to establish a base in Jharkhand more than seven decades ago helped turn it into an automaker of international repute. It was the company’s first manufacturing and engineering facility when it was built in 1945.
The flagship plant in Jamshedpur has delivered more than 2 million medium and heavy commercial vehicles for civilian and defence purposes, such as the Prima range. The Jamshedpur factory houses a state-of-the-art design and engineering centre and a technical training centre and driver training centre.
Apex Auto Ltd.
One of Apex Auto’s five units for manufacturing components is located in Jamshedpur. As India’s largest manufacturer of finished fabricated structures, Apex supplies both domestic and foreign clients with construction and earth-moving equipment. It also provides parts for defence and rail companies.
JMT Auto
JMT Auto, now a subsidiary of Amtek Auto, is one of India’s largest auto parts manufacturers. It began as a single unit in Jamshedpur in 1987 and today provides more than 2,000 different vehicle components such as gear boxes, shafts and engine parts for medium and heavy commercial vehicles. Among JMT Auto’s many clients across India is the Tata Motors plant in Jamshedpur.
There are many more auto and auto component companies that have placed faith in Jharkhand’s auto success and have pledged to help its manifold expansion. Between natural resources, manufacturing and other sunrise sectors putting Jharkhand on the map, a positive atmosphere for investment will only make the state’s momentum unstoppable.