In response to the unresolved issue of the VAT refund issue in the state of Maharashtra (India), Volkswagen India has suspended the proposed investment of Rs 2,000 crore in India. According to Mr. John Chacko Volkswagen Group Chief Representative India, the company has put its big plans for India on hold while the usual investment for operations is being maintained.
The Maharashtra government modified its VAT refund policy in 2011 and now refunds VAT on vehicles that are sold only within the state as opposed to refunding VAT on all vehicles manufactured in the state. Mr. Chacko stated that the German auto group is in talks with the state government regarding the issue.
The proposed investments by the company are aimed to support its expansion plans including increasing its manufacturing capacity, launching new car products and enhance research activities.