Hyderabad: Telangana based industrialists fear a flight of capital and factories to Seemandhra, as businessmen could not resist temptation to avail of tax concessions offered by the central government to to the residual state of Andhra Pradesh. Prime Minister Manmohan Singh had promised to grant special category status to Seemandhra region following the formation of Telangana state. “The special category status states enjoy concessions in excise and customs duties, income tax and corporate tax rates,” said Telangana Industrial Federation president K. Sudhir Reddy at a seminar on Friday.
“All these tax incentives will form 15 to 20 per cent of the sales revenue of a company. It is certain that nobody will come forward to set up factories in Telangana if the neighbouring state begins to offer this level of incentives. All those who have their operations in Telangana will also shift their base to residual AP. So we can forget about the manufacturing growth here,” said J. Nrupender Rao, the chairman of Pennar Group.
Mr Sudhir Reddy claimed that Seemandhra, especially coastal Andhra, is fairly developed and hence does not meet the criteria of being declared a special category state. They opined that winning a “political battle” by securing Telangana state would serve no purpose, if the “economic battle” is lost to Seemandhra due to special category status. The industrialists asked Telangana political leaders to secure special category status to the Telangana state else it will not have a level playing field.
