The Andhra Pradesh government has rolled out a range of incentives for Taiwan-based electronics manufacturer Foxconn, including exemption from payment of value added tax (VAT) and Central sales tax for 10 years.
Foxconn, the world's largest contract manufacturer of electronic items, has a manufacturing unit at a leased facility in Sri City in the state, set up in May last year. The company had announced investment of Rs 100 crore in the facility to take its capacity to make 20 lakh handsets annually.
In June last year, Foxconn had said it would shift its manufacturing operations to India due to a rising labour costs in China.
Foxconn produces handsets for various brands, including Chinese smartphone-maker Xiaomi, at its Sri City facility. The Andhra Pradesh government has also assured Foxconn reimbursement of "the cost of training and skill upgradation of the workers at Rs 10,000 an employee".
"Already, we see 2,500 people working at the facility. The company has sought for an additional space three times bigger, in the form of a ready built factory, from the Sri City management. That work is also going on in full swing," sources told Business Standard.
Foxconn has set up the facility in the name of Rising Star Mobiles India (P) Ltd.
Recently, the state government also directed its officials to scout for land near the facility to construct colonies for the workers, amid aggressive hiring by Foxconn.
"As these young boys and girls come from different villages, some close by and some far away from the factory, it has become a problem to maintain strict time schedules for the workers. Considering this issue, the government has decided to build multi-storied apartments for workers, especially to create a necessary ecosystem for the electronic manufacturing industries here," sources said.
In October, the Maharashtra government, led by Chief Minister Devendra Fadnavis, had announced a range of sops for the company after it announced an investment $5 billion (roughly Rs 32,000 crore) in the state over the next five years.
In August, the Maharashtra government had agreed to allot 1,500 acre land to Foxconn to set up a plant, which is expected to generate 50,000 jobs.
The state government had said it would assist Foxconn in getting loans at preferred rates of interest, including a payment moratorium period of 10 years.
Foxconn was also entitled for 100% exemption in paying stamp duty during the investment period and exempted from paying local taxes such as property tax, land tax and entry tax, according to the memorandum of understanding (MoU) signed between Foxconn and the Maharashtra Industrial Development Corporation (MIDC).