Overview
Rajasthan's origin as an auto manufacturing hub dates back to1982 when Ashok Leyland's truck chassis assembly plant was set up in Alwar.

Today, Rajasthan is rapidly developing into a key automotive hub with Bhiwadi, Neemrana and Pathredi in Alwar district being host to over 100 automotive and auto parts manufacturing companies (existing and proposed).

Key players such as Honda Siel Cars, Ashok Leyland, Eicher, Caparo, Federal Mogul, Continental Engines, Gapai, RPSC, Nissin, Bestex, Havells, Shriram Pistons & Rings, etc. have already set up their manufacturing base in the State.

Honda Motorcycle & Scooter India (HMSI) is Honda Motor's wholly owned two-wheeler manufacturing subsidiary in India. HMSI�s second plant in India in located in at the Tapukara Industrial Area and has become operational from July 2011 with annual production capacity of 0.6 million units. HMSI aims to double the annual production capacity of this plant to 1.2 million units in March 2012.

Nippon Pipe India Private Limited, part the Japan-based Nippon group, is setting up an INR 1.9 billion steel tube components project for the automobile industry in the Japanese zone at Majrakath, Neemrana.

Auto Clusters:
Promising auto cluster of Bhiwadi

• Bhiwadi region spread over approx. 5300 acres comprises of 3 industrial areas - Bhiwadi, Chopanki and Khushkera.
  
• Bhiwadi has emerged as a promising automotive cluster in Rajasthan, with the setting up of Honda Siel Cars India Ltd. factory and the manufacturing facility of Honda Motorcycle and Scooter India (HMSI).
• In close proximity to the manufacturing cluster of NCR allowing easy access to key auto manufacturers/OEMs/component manufacturers and existing large talent pool base.
• Located just 55 km away from the Indira Gandhi International Airport, New Delhi; 200 km from State Capital Jaipur; 90 km from Alwar; 40 km from Gurgaon and only 5 km from NH-8 (Delhi-Jaipur highway).
• In Bhiwadi, a special Auto & Engineering Zone has also been developed in the Pathredi Industrial Area and another special zone is being planned.
• To address availability of trained manpower, particularly for Shop-floor Operations, a Tool Room & Training Centre is being planned over 10 acres.
  
• BMA (Bhiwadi Manufacturing Association) is the representative body of all the Industrial Units located in Bhiwadi, Chopanki, Khushkhera, etc.

Neemrana: a dedicated Japanese Park in India

• RIICO has signed a MoU with JETRO (Japan External Trade Organization) whereby several Japanese companies shall set up their industrial units at Neemrana Industrial Area, in Alwar district.
• The region is equidistant from Delhi and Jaipur and will also be a part of the proposed Delhi Mumbai Industrial Corridor (DMIC), making it a strategic location for these companies.
• RIICO has so far allotted 303 acres of land to 22 Japanese companies in this area.

• Several multinational companies such as Nissin, Mitsui, Nippon, Disking, Mitsubishi & Dykie colour have got land allotted in this industrial area for establishing their units and some are already operational.
• An investment of around INR 21.5 billion is expected on the already allotted land creating employment opportunities for over 3000 people.
  

Why Locate in Rajasthan
Market Attractiveness - Easy access to one of the key auto cluster
Strategic location of Rajasthan in India allows accessibility to both western and northern automotive markets, which together account for over 57 per cent of total automobile sales in the country.

India's 60 per cent of passenger car production, 55 per cent of motor cycle production and 25 per cent of tractor production is concentrated in the National Capital Region (NCR) which is located within a radius of 200 km from District Alwar, the automotive capital region of Rajasthan.

Close proximity to the NCR region also allows for easy access to the existing auto component supplier network and logistics facilities there.

Land and Infrastructure- Easy power & land availability at low cost
Rajasthan's competitive advantage lies in its power availability, relatively low energy & land cost and availability of large contiguous land parcels which is generally a prerequisite for any automotive OEM (Original Equipment Manufacturer) to set up base.

A readily available Land Bank system is in place. Also, continuous new acquisition of land is underway for development of industry clusters by RIICO.

Human Resources - Skilled manpower at relatively low cost
The State has a comparative advantage on labour cost compared to its peer states (~20-30% lower). Proximity to NCR helps in access to industrial labour and managerial talent.

There are approximately 1,300 technical institutions in the State with intake capacity of 210,000. Total intake capacity of engineering, polytechnics and ITIs in Alwar district is 2930.

The table below provides human resource availability in Alwar district:

Type of Institute	Annual Intake
Engineering Colleges	1620
Polytechnic Colleges	290
ITIs	1020

Industry strength - Strong industrial base
The auto industry in Rajasthan is present across the entire industry value chain. The auto ancillary segment in the State has seen more investments as compared to other major states.

 Rajasthan has become a prominent base for auto manufacturing with the establishment of a growing auto cluster in Alwar district and Honda's facility at Bhiwadi.

Policies
Rajasthan Investment Promotion Scheme (RIPS) 2010:
The Government has recently announced RIPS 2010 for setting up of new enterprise, enterprises going for expansion, modernization and diversification, and projects set-up for common social good. All kinds of investments are eligible under this scheme. The new scheme also simplifies the procedure for grant and disbursement of subsidy, and introduces transparency in system, by introducing the system of online disbursement of subsidy.

Subsidies

• Investment subsidy and Employment generation subsidy have been introduced.
• The maximum amount of subsidy shall be 50% of the tax deposited, i.e. VAT and CST or SGST (whenever introduced).
  
• RIPS 2010 provides investment subsidy to all eligible investors of an amount equal to 30% of the tax deposited, without any linkage with payment of interest and wages.
• Employment generation subsidy has been announced @ 10,000 per employee/annum. For women, SC/ST and persons with disability this amount has been enhanced to 12,000 per employee/annum.
• For entrepreneurs belonging to Women, SC/ST, or person with disability category, an additional investment subsidy amounting to 10% of the taxes deposited has been kept.
• These subsidies have been announced for 7 years, but to give boost to the MSMEs in the notified area, time limit has been extended to 10 years. 
• Procedure for subsidy disbursement has been simplified by introducing a Challan for Adjustment through Treasury (Form VAT-37B).
  

Exemption from Taxes
The RIPS 2010 scheme announces exemption from payment of various taxes under the following categories of investment:
1.  New Enterprise and Project for Common Social Good
2.  Investment made for Modernization/Expansion/Diversification
3.  Sick Industrial Enterprise for its revival

The type, extent and period of exemption are as follows:

In case of Enterprises going for modernization/expansion/diversification, the exemption from payment of tax(es) shall be allowed only to the extent to which additional tax liabilities accrue due to utilization of additional capacity created after modernization/expansion/diversification.

Key Players

Recent Developments

• Honda Motor's wholly owned two-wheeler manufacturing subsidiary in India, Honda Motorcycle & Scooter India (HMSI), is building its second motorcycle production plant in the country in Rajasthan with an annual production capacity of six lakh units. Honda Motorcycles & Scooters has plans to make investment of INR 5 billion in its facility at Tapukara, Alwar and which could go up to INR 11 billion
• Honda Siel Car India had an initial investment plan of INR 10 billion. Total investment till date is INR 11 billion and may go up to INR 20 billion
• Nippon Pipe India Private Limited, part the Japan-based Nippon group, is setting up an INR 1.9 billion steel tube components project for the automobile industry in the Japanese zone at Majrakath, Neemrana.

"India is the second largest motorcycle market in the world. Rajasthan emerged as the most suitable state for locating Honda's second manufacturing facility based on the proximity to north and west markets and the existing plants."

V. Sridhar
Vice President (Manufacturing)
Honda Motorcycle & Scooter India

"We, as Honda, would like to strongly recommend Rajasthan to all potential investors... the State which is eager & willing to provide all help to attract investments and get noticed as an industrialized State.

Mr. N. K. Goila
Ex-Vice President and Ex-Director, Honda Siel Cars India

"In our meeting with the State Government, we did not discuss land prices; we did not discuss power...We discussed how to make the people in the State employed, which was music to ears."


Mr. Arun Nanda
Executive Director, Mahindra & Mahindra 

Data Source
Last Updated: October 10, 2011