Mahindra and Mahindra has warned to pull out its investment scheduled to be around Rs 4000 crore from Maharashtra – the reason being VAT refund. Maharashtra government has changed the rule for VAT refund which states that the VAT refund would be applicable only to vehicles sold within the state. While earlier it used to refund for the entire vehicles sold by a company. This will have a major impact on M&M’s annual cash flows as only 16 percent of sales come from Maharashtra.
M&M has taken up this matter with State government and they are looking for an optimal solution, however the manufacturer can’t wait for long and may move out from Maharashtra in the next phase of expansion.
Some other major manufacturers like Volkswagen and Bajaj Auto are also planning to move out new investments from the state as they are seriously concerned about this issue.
If these manufacturers stand to their word, state government would loose big revenues and hence it is imperative that senior folks at the ministry sit down to work out a solution for this.
Is the Maharashtra Government listening……?