Volkswagen set to invest Rs 1,500 cr in India hub

Plans to raise output to 200,000 units by 2018

German automobile firm Volkswagen is planning to make India a low-cost manufacturing hub, which will cater to emerging and developed markets.

Also, as part of Prime Minister Narendra Modi’s Make-in-India initiative, the company will be spending Rs 1,500 crore on localisation and producing cost-effective products, Volkswagen India chief representative Mahesh Kodumudi told the PTI on the sidelines of the Hannover Fair in Germany.

"We are looking at making India a low-cost manufacturing hub catering to emerging and developed markets. In 2014, we exported 65,000 cars, which is 60 per cent of our production from the Chakan plant," Kodumudi said.

"We are looking to export 70,000 cars this year," he said.

The company will also increase the production capacity at the Chakan and Aurangabad units in the next two years.

Volkswagen chief executive Martin Winterkorn said, "India is and will remain an important strategic growth market for the Volkswagen group. We are convinced that Volkswagen will take on a key role in the Indian automobile market in the long term. We are driving localisation forwards, with our new engine-assembly plant in Pune."

Volkswagen plans to increase its production to 200,000 units by 2018 and add more new models from the Chakan plant.

Kodumudi said the company was looking at getting into the convertibles’ segment and focus would be on building the brand. The company is planning to reintroduce the Passat sedan and a new model of the iconic Beetle this year.

“India has good potential to grow. Last year, the country produced 2.4 million units, and this year the target is 2.5 million, which will grow to four to 4.5 million by 2020,” he said.

Kodumudi, however, pointed out the frequent policy change and large currency fluctuations had hampered the growth of the sector in the previous two years.

"Now we need the government to create a stable policy framework and labour reforms, which need to be simplified.

This will help gain confidence of foreign investors. We also need to talk about FTA with the EU to help the growth of the industry," he said.

The company is also talking to the government over the cut in export incentives from 4 to 2 per cent in the recent new Foreign Trade Policy. "This move will hit the company's export plans. We are hopeful of the government restoring export incentives," he added.
STEPPING ON GAS

• Volkswagen to make India low-cost export hub
• 70,000 cars it looks to export cars this year
• 65,000 cars the firm exported in 2014