Reliance Industries, or RIL, the largest company in India, is considering shifting of its registered head office from Mumbai to Jamnagar in Gujarat, reports the Economic Times.
The proposed shift may ease the administrative burden of the company but will be a big blow to India's financial capital. According to a person familiar with the development, an informal meeting was held on January 22 on the issue expressing the uncertainty of time frame on a final decision. RIL declined to comment.
India's commercial hub since the British period, Mumbai has been losing its lustre of late, as services sectors such as technology and telecom have started enhancing the economy while manufacturing industries such as textiles weakened. Rising real estate prices and infrastructure hindrances are making the financial city unattractive. Also the war-of-words by politicians has caused uneasiness to the business community.
However, RIL's proposal of shifting may not be due to the political scenario and there is a need for the company to have key staff close to its 60-million ton refineries, the largest single-location in the world.
Usually companies find it administratively convenient to get assessed on their taxable income at the main manufacturing centre due to availability of information at that place. It has to file its tax return in the jurisdiction of its registered office or at the place where the dominant business located, said Sudhir Kapadia, a partner of KPMG. It is believed that the first rich Indian has to retain the other corporate offices of his company at Nariman point in Mumbai. It is expected that a move to Jamnagar could displace only 5,000 of its staff in Mumbai out of its 25,000 employees. Some staff could prefer to shift to Jamnagar as the company may create infrastructure for a luxurious life compared to Mumbai.
Companies too opt for other cities with better infrastructure such as New Delhi, rich in wide roads and comfortable Metros. A developer opined that the real estate prices are likely to trigger with companies moving into remote cities and is a boon to property owners of the city.
Data from the Registrar of Companies showed that 44,000 new companies were registered in New Delhi in the first nine months of the current fiscal about four times than that of Maharashtra.
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