Mahindra & Mahindra, India’s largest multi-utility vehicle manufacturer, plans to build a new facility but an alternative location outside Maharashtra.
The decision was taken due to the recent changes in Maharashtra’s tax policy on car makers. The Maharashtra government refused to concede to automakers’ demand to withdraw an amendment under which set-offs on value-added tax (VAT) would be limited to vehicles sold within the state.
“We have not announced anything yet, but we are still finalizing on one or two alternatives. We were hoping something would happen in the budget, but nothing happened,” declared president Pawan Goenka.
The major car makers in the state, such as M&M, Bajaj Auto, Tata Motors, Volkswagen, Mercedes and Piaggio, oppose the stiff amendment in VAT rules because they sell only 10-15% vehicles in the state. Earlier Mahindra was planning to build its new plant at Chakan, near Pune, but now the company considers other options, outside Maharashtra.
Volkswagen, which also invested Rs 4,000 crone in Maharashtra for plants to manufacture Volkswagen, Skoda and Audi branded vehicles, declared that future investments in the state would depend on a positive decision on this issue.
On the other hand, Piaggio India said the company doesn’t plan to move out of Maharashtra.
“Of course, the state government’s decision will effect us, but we cannot do anything about it, as we have just invested in Baramati.”