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Volkswagen bets on Maharashtra; setback to AP

Written by: Staff
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New Delhi, May 2 (UNI) German automobile giant Volkswagen, known for running robotic-driven assembly lines worldwide, has zeroed in Maharashtra reversing its earlier plan to set up its manufacturing facility in Andhra Pradesh.

''It is Maharashtra and not Andhra Pradesh'', a senior government official, who recentely held talks with the top Volkswagen management team, told UNI.

The German car-maker which had toured Visakhapatnam last year and also met Andhra Pradesh Chief Minister Y S Rajshekhar Reddy, is now keen on putting its bet on Nasik in Pune-Mumbai area. '' Two things have weighed in favour of Maharashtra. They (Volkswagen) are impressed by the development of Pune as an automobile hub and the world class Mumbai-Pune highway influenced them further'', the senior official aid.

It was at the high profile Hannover Fair that the Volkswagen team met senior ministers, including Commerce and Industry Minister Kamal Nath and government officials and conveyed their preference for the western state.

Even as the company has decided on Maharashtra, State representatives, continue their lobbying with the German giant. Top level bureaucrats from West Bengal called on the Volkswagen senior management in their bid to woo the car-maker to the eastern state.

While the Volkswagen management did not indicate the kind of foreign direct investment to be put in the Indian plant, the industry estimates suggest that the funding could be in excess of Rs 1,000 crore.

Volkswagen plans to invest in Andhra Pradesh was mired in controversies right from the state of the feasibility study. There were allegations of siphoning of money and the issue had rocked the State Assembly.

With India emerging as one of the global autombile hubs, the German car-makers are all coming here to not only to take advantage of a booming domestic market but also as a potential outsourcing centre.

SkodaAuto of the Czech Republic, (a Volkswagen subsidiary since 1991) has already set up base in India for its premium range of cars. The US-German giant DaimlerChrysler is assembling Mercedes S-Class, E-Class, and C-Class models in India while BMW AG has brought in investment close to Rs 900 crore.

According to consulting firms Booz-Allen Hamilton and McKinsey, the Indian domestic market of one million passenger cars (of which the small cars account for 70 per cent) will double by 2010 and cross 3.5 million by 2015. The country is also likely to get at least three to four per cent of the whopping 700 billion the global auto-parts market by 2015.

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