Volkswagen to hold back Rs 2,000-cr plan till VAT issue is resolved

New Delhi, May 17 (PTI): German auto major Volkswagen AG on Thursdaysaid it has put on hold the proposed Rs 2,000 crore investment plan inIndia as the Value Added Tax (VAT) refund issue with the Maharashtragovernment remains unresolved." The normal investments required for usual operations of the companyis going on but the big plans for the future have been put on hold atthe moment," Volkswagen Group Chief Representative India John Chackotold PTI. He was responding to a query on whether the Maharashtra government's change in policy regarding VAT refundhas impacted the group's expansion plans, including the Rs 2,000 croreinvestment announced in January. Earlier, to woo investors, the state government used to refund VATpaid on all vehicles sold by companies which have factories in thestate. Last year, the state government said it would refund VAT only on vehicles sold within the state. Stating that the group wants the state government to keep itscommitments, Chacko said: "We are talking to the state government tosort out the issue. We want to work in a stable conducive environmentand would like to get what was committed to us." Asked what would be the group's next step if the state governmentsticks to its stand, he said: "We will cross the bridge when itcomes." In January this year, VW had said it will invest a minimum of Rs 2,000crore on its Indian operations by 2013 to ramp up capacity, launch newmodels and strengthen research activities. The group, comprising Volkswagen, Audi and Skoda, has two manufacturingfacilities at Chakan and Aurangabad in Maharashtra. VW had announced an investment of 580 million Euros (about Rs 3,600crore) in 2008 for setting up the plant at Chakan. The group hadstated that it planned to increase the capacity of the Chakan plant to1.3 lakh units annually from 1.1 lakh cars this year.