The plant would have an initial installed capacity of half a million bikes per year and would increase it to a million units by 2008. The company has so far invested Rs 450 crore in the plant. It had last year announced that along with its ancillaries, a total investment of Rs 1,900 crore would be made in the project, which would have an overall production of 1.5 million units by 2010. Hero Honda had completed the construction of the plant last year but delayed the operations to avail the full 10-year tax holiday from the Uttarakhand government. The new plant would now enjoy tax holidays, which include zero excise duty for 10 years, no income tax for first five years and 30 per cent rebate in the following five years.

“The fiscal incentives will impact the overall bottom-line of the company positively,” Hero Honda Motors Ltd Managing Director Pawan Munjal said here.