The Maharashtra government can do little beyond using its good offices to pursue the Bajaj Auto management to revive production at its mother plant in Akurdi, near Pune.
It may offer Bajaj Auto some incentives but it cannot initiate legal proceedings, according to a senior state government official.
A meeting has been called in Mumbai on Saturday to discuss the issue, to be attended by Union Agriculture Minister Sharad Pawar, state Industry Minister Ashok Chavan, state Labour Minister Ganesh Naik, Bajaj Auto Chairman Rahul Bajaj and Managing Director Rajiv Bajaj.
State officials say since Akurdi is located on freehold land and not on premises leased by the Maharashtra Industrial Development Corporation, the state can't force any decision on Bajaj Auto.
The Akurdi plant is not part of the industrial estate of the MIDC (the plant came up before the MIDC estate was set up). Only a unit located on the MIDC-leased land needs permission from the state industry ministry for any change of use of the land, state government officials say.
"We are not sure whether Bajaj Auto was given tax sops when its plant started way back in the early '60s. But even if sops were given, the process for the recovery of sops can't be initiated against Bajaj Auto because it is governed by a limitation clause," the government official said.
"Normally, industry is given tax sops for a period of 10-15 years and then the units have to continue normal production for another 15-20 years, depending on the agreement the particular company signs with the state government and the MIDC," the official added.
"The entire textile industry moved out of Mumbai and real estate development was allowed on that land. Companies like Premier Automobile and Mukand also closed down their facilities in Mumbai and many other units were allowed to shift out of Mumbai; so how can we single out Bajaj Auto," the official said.
Observers say the only thing the state government can do is some political arm-twisting or sweet talking. "We will try to pursue the Bajaj management to not shut down the Akurdi plant and if it is facing any difficulty regarding infrastructure or requires incentives, we are willing to discuss that," said state Industry Secretary V K Jairath.
The closure of the plant has become a major issue in the state after Sharad Pawar, who is an MP from the area, spoke against Bajaj's decision to shut down the plant, which employs over 2,000 people.
Pawar is considered close to the Bajaj family -- Rahul Bajaj became a Rajya Sabha MP on the support of Pawar's Nationalist Congress Party, among others.