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Audi shelves plan to set up production unit in India

Byas Anand in New Delhi

German luxury car-maker Audi AG is firm on not making India a production base for its models, the company's global spokesman Jurgen de Graeve said.

''We have definitely shelved our plans for a production site in India,'' de Graeve said.

However, the company still continues to sell its car through direct imports of Completely Built Units or CBUs through its franchise arrangements.

The decision to shelve its India project was taken as the relaxations on indigenisation levels which the company had sought from the Union government were not granted.

It may be recalled that Audi, a Volkswagen group company, was planning to set up a joint manufacturing facility in India with another group concern -- Skoda Auto AS -- to produce its A6 and A4 models.

Under the present Indian automobile policy, car-makers are required to invest a minimum of $ 50 million in India, besides achieving a local content level of 50 per cent in three years and 70 per cent in five years.

Audi was opposed to the indigenisation programme and had sought additional time for achieving the said levels. However, the government refused the relaxation which forced the company to pull down curtains on the venture.

Audi AG was, as part of its India plans, also examining the feasibility of joining hands with a local partner for both manufacturing and marketing its luxury cars in the country. The company had, in fact, initiated talks with several Indian companies for the same.

Meanwhile, Skoda Auto's plans to set up a production base has also hit a rough patch and the company is still awaiting government relaxations on the indigenisation front.

The company plans to produce the Felicia and Octavia models in India.

In the first phase, Audi was to manufacture around 5,000 to 6,000 cars, while Skoda was to make 60,000 cars per annum.

Skoda officials had stated that the Czech car-maker has adopted a ''cautious'' approach towards the Indian market and wants to go slow on its car project. The company is also said to have scaled down its investment plans for India from the earlier Rs 10 billion to Rs 1 billion now.

The company has decided to take this watchful approach towards the market in the light of the severe recession which has hit the Indian automobile industry.

However, the company was firm on not pulling out of the country. Skoda's initial plans were to roll out the Felicia model both as a car and as a pick-up van. Another model -- Octavia -- a mid-size saloon which was launched in Europe recently, is also being shortlisted for an India launch.

The Felicia will be available in both petrol and diesel versions in India.

UNI

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