After dubious US deals, investors start doubting Congress government’s capabilities

The uproar over the recent deals signed by Chief Minister A Revanth Reddy with allegedly dubious companies, coupled with the Congress-led State government repeated maligning of the State’s economic strength, is apparently impacting Telangana’s image among investors.

If the change in government had seen companies that announced major investments here shifting location to other States, the latest embarrassment for the Congress government came in the form of concerns over its financial health aired by Jayadev Galla, chairman of Amara Raja Energy & Mobility on Saturday. In fact, Galla made it clear that if the current State government did not honour the commitments made by the previous BRS regime, his group might have to ‘look elsewhere’ for its plant’s capacity expansion.

According to news agency reports, Galla’s made the comments while speaking to the media after the Amara Raja Group’s groundbreaking ceremony for their Customer Qualification Plant for cell manufacturing and inauguration of Phase 1 of a battery pack plant of 1.5 GWh in Mahabubnagar district.

The battery maker had signed a MoU with the previous BRS government for investing 9,500 crore, over a period of 10 years, for setting up research and development and a Greenfield manufacturing facility for Lithium-Ion battery-making in Telangana, which has an ultimate capacity up to 16 GWh and a Battery Pack Assembly unit up to 5 GWh.

Galla recalled that the previous government had made certain commitments in terms of industrial incentives to bring the project to Telangana and expressed hope that they would be honoured by the present regime.

“The doubt is, it’s a different government (now) and until we see it actually happen, we won’t know. So we are hopeful, but I guess the financial situation of the government itself is in question, whether they’re capable of paying these things (industrial incentives). It is not about the intent (of the government). Do they have the funds? Do they have the



resources to honour those commitments?” he wondered, according to a PTI agency report.

“We are not expecting trouble, but you know how things go in India. When the government changes generally commitments are not necessarily always kept. We are hopeful and we are waiting and watching. As long as the experience is positive, we would not necessarily have to look elsewhere (for expansion beyond 16 gwh)…” he added.

In January, soon after the Congress came to power, Corning International Corporation had relocated its Gorilla glass manufacturing facility to Tamil Nadu. The company signed a pact with Tamil Nadu to set up its Gorilla glass manufacturing facility at Pillaipakkam, Kanchipuram in Tamil Nadu. The nearly Rs.1000 crore project was initially planned to be set up in Telangana for providing employment to 840 persons, but was inaugurated in June in Tamil Nadu after being set up by Bharat Innovative Glass Technologies Private Limited (BIGTECH), a joint venture between Corning International Corporation and its Indian partner Optiemus Infracon.

Soon after this, in March, reports came out on another multinational major, Kaynes Semicon, shifting its chip assembly unit from Telangana to Gujarat. One of the leaders in Outsourced Semiconductor Assembly and Test (OSAT) facilities, Kaynes Technology had in October last signed a pact with the State government for setting up its OSAT and compound semiconductor manufacturing facility in the State. The Rs.2,800 crore investment project was expected to generate employment to 2,000 persons. The proposed facility was to come up in Kongara Kalan, adjacent to the upcoming electronics manufacturing facility of Foxconn.

This was after the company initially planned to set up the unit in Karnataka. The previous BRS government had convinced the management to set up its unit in the State. However, in a span of six months, the company apparently had second thoughts with reports stating that the OSAT unit was being proposed with an investment of Rs.5,000 crore at Sanand, Gujarat.