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Skoda to hold investments in India

BS Reporter 

Czech carmaker Skoda on Thursday said it was holding back its future investments in the country due to uncertainties in policy framework.

The company, which on Thursday launched an updated version of its mid-size sedan ‘Rapid’ priced between Rs 7.22 lakh to Rs 10.97 lakh (ex-showroom Delhi), has also put the small car project on the back-burner owing to uncertainties in the industry related to “tax issues and other disputes”.

Sudhir Rao, chairman and managing director, Skoda Auto India said issues like the technology transfer agreement, the Fiat case (payment of excise duty on discounts) and the recent order by the Competition Commission of India which imposed a fine on several auto makers, were some of the issues which were making global automakers like Skoda decide to not invest further in India.

“We would like to invest more in the future provided these uncertainties start making us feel more comfortable. If these uncertainties become a thing of the past and we are clear about the rules of the game, then we can compete according to those rules, in the game,” said Rao.

Skoda, which sells models like Superb, Octavia and Yeti in the country, has so far invested around euro 750 million in India.

The company has engaged Mahindra Engineering Services to help with engineering aspects to create a design, which is simpler and works in India and also matches Skoda specifications for the Rapid Facelift. The completely new Rapid, on which the company is experimenting to cut down on the cost of production on future products, is expected to be launched after three years.

Skoda is working on lowering the cost of product development and increased localisation for India to raise its market share. Rao informed, \"It will take around 5-7 years to achieve 5-7 per cent market share...we would require a couple of cars in the volume segment and to get into that segment will take at least 3 years.”

First Published: Fri, September 26 2014. 00:22 IST