Mumbai / Delhi: It took two months of courting, dozens of negotiators and final talks that ran into the early hours, but Maharashtra secured its prize: a $5 billion investment commitment from iPhone maker Foxconn.
The 5-year deal, announced last weekend, is a reminder of the pulling power of India's wealthiest states - even as the central government under Prime Minister Narendra Modi hits its biggest reform roadblocks to date, over tax and land reform.
India's states, often led by charismatic local heavyweights, have long courted big businesses individually.
But for the first time under PM Modi, previously Chief Minister of Gujarat, states are actively encouraged to find solutions to reform hurdles and to compete themselves for investors' cash.
Maharashtra Chief Minister Devendra Fadnavis met Foxconn's management for the first time when he travelled to China with the PM in May.
Officials travelling with him said Terry Gou, Foxconn's chief, spent a day with Mr Fadnavis then, and led a factory tour.
They met several more times before a charm offensive - and possibly Mr Gou's professed love of naan bread - got Foxconn what it needed: a hint that value-added tax refunds could be extended beyond the usual 7-9-year limit, permission for solar power generation and help with financial transfers.
Days before Foxconn's agreement, General Motors announced it would invest $1 billion in India, largely to expand its main plant in Maharashtra. On Tuesday, South Korean steelmaker POSCO said it would set up a new steel plant in the state, with an Indian partner.
"The expectation is the competition between states will drive the so-called less fortunate states to change their systems and regulations, "said RC Bhargava, the veteran chairman of Maruti Suzuki, India's largest carmaker.
State governments have been sidestepping what officials call reform "traffic jams" in New Delhi, making the most of greater freedoms under the PM to manage everything from budgets to relaxing rigid labour laws for the first time in decades.
Most of the recent flush of foreign investment, including this week's new plant launch in Andhra Pradesh by Chinese phone maker Xiaomi, in partnership with Foxconn, is from businesses targeting India's increasingly affluent consumers.
And there are risks to a states-led development that will be skewed to India's wealthier regions, like Gujarat, Karnataka, which includes Bengaluru, or Maharashtra, home to financial hub Mumbai, and at the expense of others.
After spending much of the year battling tough opposition to his bid to make it easier to buy farmland for industry through a federal law, the central government has decided that states will set their own rules.
Ten states accounting for almost half of India's economy, and most of them led by the ruling BJP, have said they want to enact their own laws to ease land deals that boost infrastructure development.
Of course, not all industries can work without national laws. Foreign supermarkets have found it hard to open in India because only certain states allow them to, affecting scale.
The 5-year deal, announced last weekend, is a reminder of the pulling power of India's wealthiest states - even as the central government under Prime Minister Narendra Modi hits its biggest reform roadblocks to date, over tax and land reform.
India's states, often led by charismatic local heavyweights, have long courted big businesses individually.
Maharashtra Chief Minister Devendra Fadnavis with Foxconn chief Terry Gou during a visit to a Foxconn facility in China during his visit in May.
Officials travelling with him said Terry Gou, Foxconn's chief, spent a day with Mr Fadnavis then, and led a factory tour.
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Days before Foxconn's agreement, General Motors announced it would invest $1 billion in India, largely to expand its main plant in Maharashtra. On Tuesday, South Korean steelmaker POSCO said it would set up a new steel plant in the state, with an Indian partner.
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State governments have been sidestepping what officials call reform "traffic jams" in New Delhi, making the most of greater freedoms under the PM to manage everything from budgets to relaxing rigid labour laws for the first time in decades.
Advertisement
And there are risks to a states-led development that will be skewed to India's wealthier regions, like Gujarat, Karnataka, which includes Bengaluru, or Maharashtra, home to financial hub Mumbai, and at the expense of others.
Advertisement
Ten states accounting for almost half of India's economy, and most of them led by the ruling BJP, have said they want to enact their own laws to ease land deals that boost infrastructure development.
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© Thomson Reuters 2015
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