Ola's Rs 2,400 crore investment in Tamil Nadu leaves more questions than answers

Earlier this week, Ola announced that it would invest Rs 2,400 crore in setting an electric two-wheeler manufacturing facility in Tamil Nadu. The investment, an Ola press release said would fetch 10,000 jobs, while the plant itself, Ola claimed, was poised to be the "world's largest scooter-manufacturing facility", with an initial capacity of 2 million units, annually. However, a closer look at these claims reveals that the promised numbers could be a tad exaggerated.

Firstly, the investment number is nearly Rs 50 crore shy of Rs 2,400 crore. According to the government of Tamil Nadu, Ola's investment in the plant is about Rs 2,354 crore. Sources within the Tamil Nadu government also told CNBC-TV18 that the plant is expected to generate direct employment to only 2,100 people.

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"The plant will see 3,500 jobs emerge within the facility itself. The company's claim of 10,000 jobs refers to both direct and indirect employment," said a source at Ola, clarifying the claims of the press release. This simply means, while the direct employment at the plant could lie anywhere between 2,100 and 3,000 at conservative best, the 10,000 jobs that Ola refers to in its press release refers to jobs that could created within the entire supply chain surrounding the proposed plant.

Ola's release makes no mention of the proposed plant's location. However, the Tamil Nadu government has confirmed that it will take form and shape at Hosur, which also plays host to two-wheeler major TVS and upcoming e-mobility player, Ather Energy.

There have questions aplenty over the investment number of Rs 2,354 crore that it is pumping into the greenfield facility. What exactly will the money go towards procuring? How many lines will the plant have? How much of this was earmarked towards land acquisition? Both the Tamil Nadu government and Ola have tight-lipped on the investment breakup. "More details on these investment avenues will be made available in the public domain in the next few weeks," said an Ola spokesperson.

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Sources say Ola's decision to invest in Tamil Nadu was thanks largely to the state's year-old electric vehicle (EV) policy, which aims to net Rs 50,000 crore worth of investments and 150,000 jobs. The state’s policy of waiving off road tax and doing away with registration charges for electric two wheelers was also a big draw, given the promise of a robust domestic market for e-scooters in Tamil Nadu. Hosur, incidentally, is also a short drive from Bengaluru, where Ola runs its India operations.