THE Essar Group has come up with a firm proposal to set up a greenfield steel plant, with investments up to Rs 15,000 crore in Kakinada, the Chief Minister, Dr Y.S. Rajasekhara Reddy, said here today.

The Vizag Steel Plant's Rs 8,500-crore expansion plan is also expected to get the Union Cabinet nod by the end of May, while the public-sector Nalco and the Jindal Vijayanagar Groups, have evinced interest in setting up smelter plants in Visakhapatnam with significant investments.

These are some of the big ticket investment projects lined up in response to the State Government's "silent, but intensive efforts to bring in manufacturing into the State," Dr Reddy told Business Line in an exclusive interview on the eve of his Government completing a year in office on May 14.

On the German Carmaker Volkswagen project, the Chief Minister said a high-level team from the company would be in Hyderabad on May 22, to firm up the nitty-gritty of project.

The German automobile major is expected to get its board's okay for the manufacturing unit in Visakhapatnam, with estimated investments to the tune of Rs 5,000 crore.

Dr Reddy said that while the Essar Group had given him a firm proposal on its major project, the smelter units proposed by the Jindal Vijaynagar and Nalco would be implemented as joint ventures with the Andhra Pradesh Mineral Development Corporation (APMDC), so that the `minor irritants' if any would be sorted out.

Asked about the migration of large number of industrial units, especially from the pharma sector, including Dr Reddy's to States like Himachal Pradesh, Uttaranchal and Jharkand due to the tax incentives offered there, the Chief Minister said, "The problem is real and will continue till 2007. What we have done is to write to the Centre and the State Governments asking them not to extend such tax holidays and other incentives as they would create problems for other States. On our part, the State has initiated steps to provide adequate incentives to the industry."

Referring to irrigation projects, which has been his Government's major commitment to the people, after free power to farmers, Dr Reddy said that he was confident that clearances would be obtained for the proposed projects on the river Godavari and work started within the next three to six months.

On the issue of foreign direct investment, Dr Reddy said that though the figures were not readily available for last fiscal, there was a general decline in the past 5 years.

During 2000-04, the State attracted Rs 4,5000 FDI against the target of Rs 25,000 crores. Similarly during 1996-2000, the investments were Rs. 11,500 crore. Efforts are definitely on to reverse the declining trend and attract investments.