Volkswagen’s Rs. 2000 Crore Investment in Maharashtra Deferred

Volkswagen AG, the auto titan from Germany has recently revealed that the company’s plan of investing Rs. 2,000 crore in the in India has been deferred indefinitely. The reason behind this is the refund issue that is going unresolved with the government of the state of Maharashtra. According to the Group Chief Representative of the Volkswagen India, Mr. John Chacko at present the company needs investments for normal and usual operations so the big plans for its future in India have been put on hold for the moment.

Mr. Chacko statements were in response to the queries regarding the issue going on with the Maharashtra government which concerns the policy change for the refund of VAT which has adversely affected the Volkswagen Group’s plans for expansion. The investment of Rs. 2,000 crore announced in January 2012 was a part of the same expansion plans. The refund of VAT on all vehicles sold by the companies with factories in the state was a former policy adopted by Maharashtra in order to woo more investors.

Last year the government abruptly changed the application area of the policy according to which the refund of VAT will be applicable on the vehicles sold within the state only. Mr. Chacko insists that the government should be firm on its commitments and also states that the company is engaged in talks with the government to sort this issue, as it wants to work in an environment which is stable and conducive and also the company would really appreciate, if it receives what has been committed to it. He also mentioned that if the state government does not move from its stand then as a part of the next step the company would be ready to cross the bridge.

In the month of January this year, Volkswagen India announced a minimum investment of Rs. 2,000 crore by 2013 for the expansions operations in India, which include the ramping up of the capacity and launching new models and strengthening the activities related to research and development. The Volkswagen group also includes other auto majors like Audi and Skoda and these car makers too have facilities in Maharashtra at Aurangabad and at Chakan. The earlier expansion plans of VW include the announcement of an investment of Rs. 3,600 crore or 580 million euros for the development of Chakan plant in 2008. The group had also lined-up plans for the enhancement of the capacity of Chakan plant from 1.1 lakh units to 1.3 lakh units in this year.

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