After Amazon, Bosch threatens to ditch Karnataka

 

Bengaluru, 29 June 2015: Steffen Berns, the India unit head of €49-billion German auto component giant Bosch, tore into the Karnataka government for its culture of red tape, and threatened to shift the company’s expansion plans elsewhere.

 

Delivering a lecture on the “Multinational Perspective on Make in India” at the 38th Annual General Meeting (AGM) of the Bangalore Chamber of Industry and Commerce (BCIC) on Saturday, Berns thundered: “Bosch is thinking of diverting its expansion plans to other states because of delays in approvals. We have got lots of support from the Karnataka government here, which we really appreciate, on many issues…but looking at the construction progress, getting electricity, it took us 29 touchpoints and 19 months to get approvals for two of our office buildings. 

 

“To tell you…it was not for land acquisitions…just for electricity connections. It took us seven months to get approval for simple logistics.”

 

He added: “We have completed phase-I construction activities of the new plant at Bidadi, which also took a lot of time. We are still waiting for approval of electricity connections. These are the points which I cannot explain to my headquarters in Germany. It is not a question of whether we have to wait six months longer.But, it is a question of whether we can continue investments in Karnataka, or look to invest in other parts of India or Asia.”

 

Loud complaints by multinationals against the State government have acquired a familiar ring of late. A few months ago, American eCommerce giant Amazon had announced it was putting on hold all future investment plans in Karnataka after a long-running dispute over payment of value added taxes (VAT) boiled over. 

 

There at least, the State commercial taxes department could argue about the merits of its contentions.

 

But the grievances of Bosch are sure to touch a chord. The German marquee name has been one of the earliest multinationals to make in India, with its first plant coming up in Adugodi in the city in 1953.

 

Berns referred to that heritage in his speech. “As a multinational company, we are present in Karnataka for over 60 years and we are still facing issues. We have to think twice to continue to make further investments and we don’t see enough improvement yet.” 

 

According to him, labour laws with unclear terminology, multiple contradictions, and complex problem resolution mechanisms are among the major hurdles to making more investments in India.

 

Yuken India Managing Director C P Rangachar waded into the debate when he concurred, “We need stable and fair laws. A new company is subjected to 52 government departments for approvals.”

 

It was left to Karnataka Minister for Higher Education and Tourism R V Deshpande to try and salvage the situation. Regretting the inconvenience caused to Bosch, he urged Berns to continue to invest in Karnataka. “There are difficulties, I don’t deny that. The government of Karnataka is committed to solve the problems faced by industries.” With folded hands, Deshpande said, “Please don’t go anywhere…please do invest here.”

 

Gaurav Gupta, Commissioner Industrial Development, and Director of Industries and Commerce, claimed that projects worth around Rs 97,000 crore has been approved under the leadership of Chief Minister Siddaramaiah, generating 2.27 lakh employment.