Last month, a group of 25 Japanese visitors came to Neemrana, but not to see the famous fort there. They were inspecting the site of a proposed industrial estate that has earned the sobriquet of ‘Little Japan’ at the drafting stage itself. About 100 km from Delhi and 60 km from Haryana’s industrial hub of Manesar, Neemrana is situated on national highway (NH) 8 and beside the proposed rail freight corridor.
Its geographical advantages are, however, not its only selling point. The 1,170-acre Neemrana Phase III industrial estate will not only offer big tax breaks, but also an exclusive zone to Japanese investors. Or, more specifically, auto component makers from that country. Rajasthan has further sweetened the deal by offering to slash the 4 per cent sales tax to 0.25 per cent for these companies.
In response to the proposal submitted by Japan External Trade Organisation (Jetro), the Rajasthan Industrial Development and Investment Corpora- tion (Riico) has offered to give customised plots to Japanese investors. Said Kuldeep Ranka, managing director, Riico: “We want to attract investments in the auto sector as it creates a lot of jobs.”
But Riico’s offer depends on how many investors queue up for Neemrana. The deadline set for proposals is December 2006. By then, if ‘sufficient’ investment is not forthcoming from the Japanese, Neemrana will be opened to investors from other countries. So far, representatives from 35 Japanese companies have inspected the site, and 10 companies have forwarded their demand for 10-20 acres each. This adds up to more than a sixth of the 600-acre built-up area in the complex. The Japanese, though, want more time. According to N. Noguchi, director general, Jetro, a deadline of June 2008 will be more realistic as prospective investors are still visiting the undeveloped area and reporting back to their headquarters in Japan.
Lower costs are a definite plus for the proposed Little Japan, and affordable land prices are the most crucial aspect. Gurgaon, the favourite Indian destination of Japanese auto and component companies, ran out of industrial land years ago. The Manesar and Bawal industrial estates, located further south along NH-8, too, have little vacant land left. Land prices in Manesar are touching Rs 10,000 per sq. m, while in Bawal it is hovering around Rs 2,000 per sq. m, points out Noguchi.
In contrast, Neemrana promises both affordability and availability. Riico acquired some 1,170 acres in Neemrana at approximately Rs 400 per sq.m. Even if infrastructure development costs are taken to be Rs 700-800 per sq.m, it adds up to Rs 1,100-1,200 per sq.m. That is a significantly better deal than acquiring farmland around Bawal for Rs 1,500-2,000 per sq.m.
And price is just one part of it. Says Y. Sei, director, Indo-Asian Development, which helped Mitsui Kinzoku set up a sheet metal part unit at Bawal: “Even if a Japanese company is willing to pay a high price, there are difficulties in ascertaining land titles and getting land use changed from farming to industrial.”
Neemrana’s proximity to NH-8 also makes it an ideal location for a logistics hub for the Japanese companies in Gurgaon. Trading giant Itochu Corporation is already conducting a feasibility study for a logistics base at Little Japan. Plus, plans are in place for a power back up.
J Power has proposed a compact power production unit at Neemrana. If things go according to Jetro’s plans, it will be a self-sufficient industrial cluster run almost entirely by the Japanese.
