VW puts Rs 2k-cr Maharashtra investment plan on hold

German auto major Volkswagen AG on Thursday said it had put on hold the proposed Rs 2,000-crore investment plan in India, as the VAT (value-added tax) refund issue with the Maharashtra government remained unresolved.

“The normal investments required for usual operations of the company is going on, but the big plans for the future have been put on hold at the moment,” Volkswagen Group Chief Representative India John Chacko said. He was responding to a query on whether the ongoing issue with the Maharashtra government over the change in policy regarding VAT refund has impacted the group’s expansion plans, including the Rs 2,000-crore investment announced in January.

To woo investors, the state government used to refund VAT paid on all vehicles sold by companies that have factories in the state.

It was, however, modified last year and the state government said it would refund VAT only on vehicles sold in the state.

Stating that the group wants the state government to keep its commitments, Chacko said: “We are talking to the state government to sort out the issue. We want to work in a stable conducive environment and would like to get what was committed to us.”

Asked what would be the group’s next step if the state government sticks to its stand, he said: “We will cross the bridge when it comes.”

In January this year, Volkswagen had said it would invest a minimum of Rs 2,000 crore on its Indian operations by 2013 to ramp up capacity, launch new models and strengthen research activities.