In Maharashtra’s loss of Vedanta-Foxconn project to Gujarat, ‘double engine’ sarkar belied

It was first seen in 2015, nearly a year after Narendra Modi and Devendra Fadnavis had assumed charge at the Centre and in the state of Maharashtra, respectively. The Modi government enacted a law to govern the International Financial Services Centre (IFSC). Soon after, the Gujarat International Finance Tec-city (GIFT) submitted its proposal to set up India’s first international finance centre. While presenting the 2015-16 Union budget, the then Finance Minister Arun Jaitley shifted the Centre’s focus from Mumbai to GIFT as a potential global financial centre, like Singapore or Dubai.

Previously, the Congress-led UPA government had focused on developing Mumbai’s Bandra-Kurla Complex (BKC) as a financial hub. In 2007, a government-appointed committee led by former World Bank official Percy Mistry recommended making Mumbai a financial centre along the lines of New York, London and Singapore with BKC at its centre. Since then, the state government-run Mumbai Metropolitan Region Development Authority (MMRDA) developed and promoted BKC as a destination for global companies to house their Indian branches.

However, with the Modi government at the helm in the Centre, India’s financial capital, which was the natural choice for the IFC, lost its most ambitious project to neighbouring Gujarat. Shortly after the budget announcement, India’s securities market regulator, the Securities and Exchange Board of India (SEBI), announced enabling guidelines for entities setting up in an IFSC. And GIFT was right there.

Next was the National Academy of Coastal Policing. The deadly 26/11 terror attack on Mumbai had triggered the idea of setting up a marine police academy and a special commando training centre. For the former, Palghar was picked as the location, considering its proximity to Mumbai. The academy was conceptualised as the first-its-kind school in the country to train police and paramilitary forces personnel in sensitive and vulnerable coastal security. The ambitious project was about to take off nearly a decade after threats to the Indian coast came to the fore during the 26/11 terror attacks in 2008. Accordingly, the state government initiated the process and acquired 305 acres of land to set it up. However, without offering any good reason, the Union home ministry decided to shift it to Dwarka in Gujarat.

There can’t be anything bigger than the state of Maharashtra losing the Rs 1.54 lakh crore Vedanta-Foxconn project to Gujarat which, like the Brihanmumbai Municipal Corporation, is expected to go to polls later this year. What’s ironic here is the fact that it was the BJP’s Devendra Fadnavis who had been chasing the project for Maharashtra. Fadnavis, in his first stint between 2014-19, had set his eyes on another mega project, again by Foxconn. That unfortunately didn’t materialise. He then set his sights on the Foxconn-Vedanta plant when he regained control of the reins of the state after dislodging the Uddhav Thackeray-led government. Fadnavis, with Chief Minister Eknath Shinde in tow, had a series of meetings with the Vedanta team, the last meeting taking place on August 30. It was all destined to be in vain, though, with Vedanta preferring Gujarat to Maharashtra for reasons better left unstated.

Other than “successfully” diverting Maharashtra’s investment to Gujrat, there are quite a few examples where the Modi-led Centre either delayed or refused clearance for some important projects, apart from the “political” delay caused by governor Bhagat Singh Koshyari in approving the nomination of 11 members to the state legislative council. The Uddhav Thackeray-led government submitted the list of 11 members to governor Koshyari in November 2020. The governor, for reasons easy to guess, couldn’t find the time to clear it till the Maha Vikas Aghadi government collapsed in July 2022. Now the Eknath Shinde-Devendra Fadnavis government is expected to submit a fresh list. It will not be surprising if Koshyari wastes no time in approving it.

Besides such political delays, one of the important projects that was held up was the Dharavi redevelopment. Asia’s largest slum is partly spread on land belonging to the railways. The Centre rightfully asked the state to pay up for the land, which it did. What’s intriguing is that even though the Maharashtra government deposited Rs 800 crore towards the land cost, it never received the requisite green signal from the Centre. What’s not at all surprising is the BJP-backed Eknath Shinde government’s recent statement indicating how expeditiously the Dharavi redevelopment project is being cleared by the Modi government. It’s anybody’s guess whether the project will take off before the BMC elections.

This, as the legendary Fleming notes, is enough to underline a trend that seriously undermines our federal structure. It’s always heartening to see states vying for investments, but it’s equally damaging to see the powerful Centre favouring one state over the other. It not only makes the battle unfair, but also threatens the federal fabric of the nation. However, Maharashtra politicians undoubtedly owe explanations for their consistent flip-flop over mega projects, beginning with Enron’s ambitious power project. It was the Sena-BJP government that had scrapped the project, only for it to be revived later. It was again the same combination that sealed the fate of the Nanar oil refinery, a joint venture between India’s state-owned PSUs and Saudi Arabia’s Aramco. The over Rs 3 lakh crore project was stayed ahead of the 2019 state assembly elections. If the BJP’s opposition was responsible for the Enron imbroglio, it was its now-estranged partner Sena that was behind the Nanar fiasco. Though at loggerheads with each other now, these two saffron siblings both have a fair share of responsibility in pushing Maharashtra back on the investment front. This made Modi’s task of wooing investors easy — a task that was made even easier by his elevation to PM.

This episode, however, exposes a fallacy in PM Modi’s electorally popular “double engine” theory. It implies faster development if the “same party” — obviously, the BJP — is in power in the states and at the Centre. As one senior government functionary put it, “Only the first one matters in double engines, the second one has nothing to do except to follow the first one.” Maharashtra would know this by now.

The writer is editor, Loksatta