Mahindra and Volkswagen looking at Uttarakhand for new production facilities

Uttarakhand is emerging as a possible location for automakers like Mahindra and Volkswagen, who are said to have evinced interest to set up their production units at one of India’s newest states. Both Mahindra and Volkswagen, who have manufacturing facilities at Maharashtra are said to be unhappy with the Maharashtra state government’s new VAT rules under which only the cars built and sold in the state are eligibile for a VAT refund. Cars built in Maharashtra and sold elsewhere are ot eligible for a VAT refund and this is the bone of contention between the various automakers and the state government.

2012 Mahindra XUV500 SUV

In the past few months, Gujarat has been named as a possible gainer from Maharashtra’s new VAT structure for automakers, and now, it seems like Uttarkhand is another state that could stand to benefit from the imbroglio, that shows no signs of an agreement. Uttarakhand has played host to automakers at Haridwar and Pantnagar, where Hero MotoCorp and Tata Motor have their facilities. Now though, a new location is being mooted for development, in the form of Sitarganj, even as both Haridwar and Pantnagar have very little land remaining for industrial development.

Incidentally, Sitarganj is the constituency from where the current chief minister of Uttarkhand, Mr Vijay Bahuguna, is contesting elections from. So, his election to the state assembly will be a much watched affairs as politicians typically tend to favor their constituencies with large scale development programs that generates both employment as well as investments. Mahindra has demanded a land bank of 700 acres for its new factory while Volkswagen is said to have asked for 200-300 acres of land.

2012 Volkswagen Polo Hatchback

If indeed Mahindra and Volkswagen set shop in Uttarakhand, it would augur well for the overall development of the country as a whole as it could result in the auto industry branching out to diverse locations across the country instead of being concentrated in certain states like Tamil Nadu, Gujarat and Maharashtra. Currently, Mahindra has established its manufacturing facilities at multiple locations in the country with states like Tamil Nadu, Andhra Pradesh and Maharashtra playing host to its factories. Volkswagen though, has a single manufacturing unit at Chakan, off Pune. However, Aurangabad is another location at which the Volkswagen group has a presence in, in the form of Audi and Skoda having assembly facilities.

Source BusinessStandard