VW scales down Indian outlay plans over VAT issue

German car maker Volkswagen today said that it will invest €100 million (Rs700 crore) in India over the next two years.

The investments will be made in its group companies such as Volkswagen India Pvt Ltd, Skoda India Pvt Ltd and Audi India, its group representative in India John Chacko told newspersons on the sidelines of the annual convention of Society of Indian Automobile Manufacturers (SIAM) in New Delhi.

''The investments will be made in improving facilities, doing minor model changes and other areas,'' he said.

However, Chacko said that some Rs2,000 worth of investment plans for Maharashtra have been put on hold due to unfriendly government policies, including an unresolved VAT refund issue.

''Policy decisions have not been favourable. As a group we had planned to invest Rs2,000 crore, but that is on hold since lots of policy decisions are confusing. We are however still putting pressure on Maharashtra government on various policy issues,'' Chacko said.

To woo investors, the state government earlier used to refund value-added tax paid on all vehicles sold by companies which have factories in the state. However, this was modified last year with the state government saying it would refund VAT only on vehicles sold within the state.