Honda’s new production plant at Karnataka to get attractive tax incentives from the state government!

When it comes to investment in the automotive sector, Karnataka has fallen behind neighbor Tamil Nadu, with the latter cornering a lion’s share of the automotive investment happening in the south of India. One big ticket investment that Karnataka has managed to snag in recent times has been that of Japanese two wheeler giant, Honda, choosing the state for setting up its third manufacturing facility in the country, capable of churning out no less than 1.2 million two wheelers each year, taking Honda’s installed capacity in India to 4 million two wheelers every year. The production capacity can further be increased by 50% to 1.8 million units per year.

2012 Honda CBF Stunner

Honda will set up the manufacturing unit on 96 acres of land at Narsapur in Kolar district, which is about 52 kilometers away from the state capital of Bangalore. The plant will directly create over 3,000 jobs and will entail an investment of NR 1,350 Crores. The new Honda manufacturing plant will use 80% of local labour, thus generating vital employment opportunities to locals. Honda’s adherence to this employment figure is crucial if it intends to make use of the subsidies that the Karnataka government has granted it.

2012 Honda CB Twister 110

Meanwhile, here are the various sops that the Karnataka government is offering to Honda,

* Exemption from registration fee

* Deferred VAT payment of up to 40 per cent for a period of 10 years with Honda having to pay the arrears from the 11th year.

* Reimbursement of 95 per cent of Central Sales Tax for 5 years

All these measures are consonant with Karnataka’s policy for attracting new investment into the state. Recently, Swedish heavy commercial vehicle maker Scania, announced plans to set to set up a new plant at Karnataka to begin producing its range of HCVs for the Indian market. Hero MotoCorp is also said to be mulling a plant in Karnataka, its first ever production unit in South India.

Via News24Online

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