Ready to invest more in India, policies must be consistent: VW

German automaker Volkswagen Group has lined up several new launches in India, including small car UP!, but policies in the country need to be consistent in order to attract more investments, a top group official said.

"India is a very important market for us, but you need a stable economic and legal situation which is not always the case in India. This is one of the issues that needs to be addressed in India," Volkswagen Group Vice-President Sales and Marketing, Christian Klingler told PTI.

The company's Indian arm is among the many automobile manufacturers with plants in Maharashtra which are impacted after the state government changed the VAT refund policy. Earlier, in a bid to woo investors, the state government used to refund VAT paid on all vehicles sold by companies which have factories in the state.

It was, however, modified last year and the state government said it would refund VAT only on vehicles sold inside the state and not outside.

Other companies like Mahindra & Mahindra, General Motors India and Bajaj Auto have also complained against the change in the policy by the state government.

When asked about the group's plans to increase investments, launches and capacity expansion in India, Klingler said: "We are planning and are prepared to launch a number of projects in India, but in the current phase we are not willing to share and will announce soon".

Earlier this year, Volkswagen had said it would invest a minimum of Rs 2,000 crore on its Indian operations by 2013 to ramp up capacity, launch new models and strengthen research activities.

Klingler said the group at present is "right in the launch phase in India".
Among new introductions planned for India, the auto giant is currently contemplating launching its small family car UP!.

"We are currently examining market opportunities in India and China (for UP!)," Volkswagen Group Chairman Martin Winterkorn said.

He, however, clarified that no concrete decision has been taken yet on the same.
"The decision on introduction of the UP! car in India and China has not yet been made. We have to wait and watch. We have to see how the market in India develops, but it will not grow as fast as China," Winterkorn said.

Worldwide, the Volkswagen Group is banking on the small car segment for growth. According to the automaker, there is an attractive demand for its small cars.

"In the first phase, the Volkswagen UP! and its siblings from Skoda and SEAT will attract additional customers in Europe. We will then roll out the models to the growth regions starting 2013," Winterkorn said.

In Brazil, the group intends to sell up to 1,50,000 vehicles a year in the medium term using a localised version of the UP!, he added.

"And we are also currently examining market opportunities in India and China," he said without specifying the brands.

Last year, the group completed 10 years in India and sold 1,11,623 cars, a growth of 109.3 per cent over 2010.

The group, comprising Volkswagen, Audi and Skoda, at present has two manufacturing facilities at Chakan and Aurangabad in Maharashtra. In China it sold about 2.3 million vehicles in 2011.