Volkswagen India, the Indian subsidiary of the Germany based automotive group, earlier this year had announced to invest a whopping Rs.2,000 crore in its Indian operations based in the state of Maharashtra. Owing to the unresolved dispute with the government of Maharashtra with regards to the VAT refund, the automaker has put on hold its major investment plans.
However, the routine investment plans will be embarked upon in an unaffected manner but the decision of the government on the VAT refund issue will pronounce whether the major investments will be infused by the company in the Indian unit or not.
The Government of Maharashtra had earlier revealed that refunds will be made on the VAT paid on all the vehicles sold by companies that have their production plants located in the state. The move was considered highly motivational to boost up the production quantum. But the recently implemented change restricted the refund to only VAT paid on those vehicles sold within the state.
Volkswagen has staunchly opposed the discouragement announced with the new policy and is deliberating with the government to issue some relaxation in the policy and stick to the commitment made earlier.
The automaker operates the manufacturing activities of its subsidiary brands VW, Skoda and Audi in two dedicated plants in Maharshtra and the major investments were intended to catapult the production capacity, cater new launches and R & D activities.
