Fipb Clears 100% Arm Of Piaggio

The Foreign Investment Promotion Board (FIPB) has cleared Italian scooter major Piaggio Cspa's proposal to set up a wholly owned subsidiary in India, overriding objections from the department of heavy industries.

The Piaggio proposal came before the FIPB twice earlier. Each time, the department of heavy industries sought a deferment on the grounds that until the law ministry gave its verdict on Piaggio's takeover of the seriously ill Scooters India, clearance could not be given for a 100 per cent subsidiary. The last time FIPB discussed_and deferred_the Piaggio proposal was on January 17.

No attention was paid to Piaggio's argument that its proposed subsidiary was meant to act as a holding company for channelling its investment into India, and had nothing to do with the decision to take over Scooters India.

 

A senior official in the FIPB said: "How long could we have kept them (Piaggio Cspa) waiting? This kind of delay (in giving clearances) just sends a bad message to other potential investors."

Piaggio proposes to make an initial investment of Rs 200 crore ($45 million) through its fully-owned arm in a new project that will manufacture scooters and mopeds. It wants to make India its biggest global export base, at par with China. Piaggio plans to export two-wheelers and components from India, and has fixed a target of $ 50 million in components export alone, to be achieved in three years.

The company wants to ensure a 30 per cent share of the market segment that they are in at present. The market for two- and three-wheelers in India is huge and Piaggio wants to build a strong Piaggio brand. In Europe, Piaggio has 36 per cent share of the market for scooters.

The target countries for Piaggio's exports will be Sri Lanka, Bangladesh, Pakistan, and countries of Southeast Asia, Africa and South America.

It will invest more in phases into the subsidiary arm. One of the new projects it has in mind for the Indian market is a new model of the Vespa.

In December last year, the company submitted a no objection certificate from its erstwhile Indian partner LML in support of its proposed subsidiary.

It already has a joint venture in India with Thapar-owned Greaves Ltd to manufacture three-wheelers.