The Karnataka Cabinet has approved a proposal to extend several tax incentives to Honda Motorcycles and Scooters India Limited (HMSI), a wholly-owned subsidiary of Japanese auto major Honda Motor Corporation.
HMSI is setting up a two-wheeler plant at the Narasapur Industrial Estate in Kolar district, about 52 km from Bangalore, at an investment of Rs 1,300 crore. The plant will have an annual capacity of 1.8 million units. This is the company’s third manufacturing facility in the country and first in south India. The government has decided to covert 40 per cent of the value-added tax (VAT) into interest-free loan for 10 years. It will be repayable from the 11th year for the next 10 years, Suresh Kumar, minister for law and parliamentary affairs, said.
Briefing reporters after the cabinet meeting chaired by chief minister DV Sadananda Gowda, here on Friday, he said the state government would reimburse 95 per cent of the central sales tax to the company for a period of five years. It would also exempt the company from paying stamp duty and registration fee for registering the land. The company has been allotted 96 acres land by the Karnataka Industrial Area Development Board (KIADB) at Narasapur.
“The Cabinet decided to extend these incentives to the company with a condition that it would provide 85 per cent jobs to the local people in all departments. The company has agreed to our condition,” Kumar said.
HMSI in its proposal has indicated it would provide direct jobs to 3,200 persons and indirect jobs to about 15,000 persons. HMSI’s other two plants are located at Manesar with a capacity of 1.6 million units in Haryana and Tapukara with 1.2 million units in Rajasthan. HMSI, which sold 1.6 million vehicles last fiscal, has set a sales target of 2.10 million vehicles this fiscal.
The new plant in Karnataka is expected to bring down the waiting period for Honda vehicles in south India. Currently, HMSI products have waiting periods ranging from six weeks to six months. The company takes around seven months to deliver a Honda Activa in south India.
HMSI’s current product line-up includes three automatic scooters (Activa, Dio & Aviator) and six motorcycles (CB Twister, CBF Stunner, CB Shine, CB Unicorn, CB Unicorn Dazzler and CBR 250R).