Bengaluru-based Ather Energy's Rs 2,000-cr investment in Maharashtra: Priyank Kharge, Mohandas Pai react

Ather team with Maharashtra Deputy CM Fadnavis

The decision of Bengaluru-based electric two-wheeler maker Ather Energy to set up its new and third manufacturing facility in Aurangabad Industrial City (AURIC) in Maharashtra with an investment of Rs 2,000 crore appears to be another setback to Karnataka's efforts to attract investments to the state.

Also, read: Bengaluru-based Ather Energy to invest Rs 2,000 crore in new facility in Maharashtra

Spokesperson of the Congress government in Karnataka and IT-BT Minister Priyank Kharge told Moneycontrol: "Whoever has come for discussion at our table, we haven't let them go. In this case, we were not in advanced talks or negotiations, so it's not a matter of losing".

Also, read:  'Shocking that Karnataka lost out to Tamil Nadu in landing investments from Ather, Ola'

Former Infosys CFO TV Mohandas Pai criticised the state government, saying, "Karnataka is unable to close deals, and the level of engagement is insufficient. They will only visit foreign countries and take pictures, but there is no follow-up action. Karnataka was the first state to come up with an EV policy in 2017, but most EV manufacturing units are now being established in other states."

Kharge said: "Why nobody is talking about the huge success story of the Apple ecosystem that we brought in, and these are major wins. Also, no company will put all their eggs in one basket. I can assure everyone that no company has left Karnataka after coming to the negotiation table. All states are fiercely competing for investments. About 65 percent of aerospace activities are happening in Karnataka, which no other state is even close to."

Ather has two facilities in Hosur in Tamil Nadu and the firm was looking to finalise setting up another facility.

Pai said Ather and Ola are pioneers in the EV industry. "If one or two major early players move to a state, the entire ecosystem can shift. Tamil Nadu is a prime example in the EV sector. Now, the semiconductor industry is shifting to Gujarat because the state offers a 20 percent capital cost subsidy. While the Union government may be pushing firms towards Gujarat, what subsidies is the Karnataka government offering to attract firms? Maharashtra likely offered attractive incentives and negotiated well, which could be the reason why Ather chose to invest there." said Pai.

Kharge alleged on June 25 that Prime Minister Narendra Modi is pressuring companies to invest in Gujarat by blocking investments intended for Karnataka.

Kharge also said he will meet Union Finance Minister Nirmala Sitharaman on June 27 to seek similar incentives for companies interested in investing in Karnataka, similar to those offered in Gujarat(subsidy of 50 percent offered to Micron Technology from the Union government). "One company, mentioned by former Infosys CFO TV Mohandas Pai, moved from Karnataka to Telangana and then to Gujarat. Another company initially came here but later relocated to Gujarat," said Kharge.

Also, read: Karnataka IT minister Priyank Kharge alleges PM Modi pressuring companies to invest in Gujarat

However, Pai said: "Kaynes SemiCon was searching for land in Karnataka for six to eight months and then shifted to Telangana, and later they went to Gujarat because of the favourable ecosystem. If the Karnataka IT minister is blaming the PM, then why did they leave Karnataka and look towards Telangana in the first place?," said Pai.

"In Karnataka, land prices are high because real estate is backed by politicians. Bengaluru is facing tough competition from Hyderabad in the tech sector, but Bengaluru lacks proper infrastructure. The Chief Minister and Industries Minister should conduct regular reviews, focus on follow-ups, ensure single-window clearance, conduct proper marketing, and provide land and electricity without delays. They should set up a war room and monitor dashboards in real-time," Pai said.