Tamil Nadu may get another Rs 4,200-crore investment from Renault-Nissan

CHENNAI: Renault-Nissan, which began its passenger car project in Tamil Nadu a few years ago, may be closer to making another large investment after the Franco-Japanese alliance and the state government sorted out tax refund issues.

The state government, preparing for its first global investor summit, is targeting a second deal with the car maker soon.Renault-Nissan is expected to sign a memorandum of understanding with the Tamil Nadu government for an investment of Rs 4,200 crore, according to people aware of the developments.

The alliance manufactures a range of passenger cars including the top-selling Renault Duster at the 640-acre factory. It will soon start making the Kwid, a sub-Rs 4 lakh car, at the plant. The company has invested about Rs 4,500 crore over the past seven years.

A top state government official said differences over the quantum of value-added tax and central sales tax refunds have been resolved after over a year of consultations with the company.

"We have begun releasing assimilated arrears. As of now, Rs 600 crore of the outstanding Rs 1,900 crore have been given back and more will come in subsequent months. Now that this issue is behind us, we are certainly doing our best to sign the second MoU," said the state government official.

Nissan said in a statement to ET that it is in discussions with the Tamil Nadu government. "We will not be commenting on the details of any talks. India is a major market for us and we are committed to growing our presence," a Nissan India spokesperson said. "Any announcement on further investment will be made in due course."

Renault-Nissan started investing in Tamil Nadu in 2008 after the state government unveiled incentives for automobile projects with investments exceeding Rs 4,000 crore. The benefits included land at concessional price, exemption from stamp duty and electricity tax, dual feeder power lines and refund of output value-added tax and central sales tax. The cap on refunds were made as high as 115% of the eligible investments made by the manufacturer over seven years.

State government officials said they expect the Global Investor Meet slated for September 9 and 10 in Chennai to trigger further investments. Chief Minister J Jayalalithaa is said to be hands-on regarding the progress of the dialogue with the industry. Top bureaucrats and officials are getting down to brass tacks utilising opportunities like CII conferences and meetings with company representatives to ensure maximum yields.

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