Will Budget 2016 Help India To Become Manufacturing Hub

India’s plan to become a manufacturing hub is beset by a host of problems. The Budget is expected to provide little succour.

- Sumant Banerji

Last year, Tata Steel started the first phase of its steel plant in Kalinganagar, Odisha. Spread over 3,741 acres, at full capacity, it will be India’s largest single-location greenfield steel plant. But what is more telling is that it is just one of the few greenfield steel plants to be built in India in the last 20 years. It sure did take some time coming.

Planned at a cost of `15,000 crore, it was to start in 2010, but got bogged down by an agitation by locals who claimed they owned a part of the land given to the company. After January 2, 2005, when 13 agitators were killed in police firing, the work stopped.

This took the company by surprise. Tata Steel had, after all, built Jamshedpur, then one of India’s most modern cities, around its steel plant. Surely, the plant would help Kalinganagar, it thought. However, the sense of injustice among the locals, who were offered just `37,000 an acre by the government in 1993, overrode everything.

“Till January 1, 2005, we thought the land was ours, as we had paid for it,” says Rajiv Kumar, Vice President, Operations, Kalinganagar project, in Tata Review, the Tata Group’s in-house magazine. “We did not foresee any problem. We had the Tata name, we had been in Odisha for 100 years, and we believed we had built social equity with the community. But some stakeholders did not see it that way, there were others who were fiercely opposed to us, there was local politics. We were just not aware of the factors at play,” he says.

The Tatas were being fed this bitter medicine at another place too. Around the same time, Tata Motors’ Nano project in West Bengal was facing a similar problem. Unlike Kalinganagar, though, it was resurrected at Sanand in Gujarat. Critics said Kalinganagar would meet the same fate.