India lacks in ease of doing biz: Volkswagen

As it lines up a fresh Rs 8,000-crore investment for India, German auto giant Volkswagen Group has said that it is not easy to do business in the country and warned that putting restrictions on, or delaying, imports of critical components from China is a retrograde measure and an “old socialist model, held good in a closed economy”.

The move will harm India’s domestic competitiveness and also hamper prospects in exports, the company, which plans to launch new models in India and expand operations, said.

“Any knee-jerk reaction can hurt us more... If we want to be an exporter, certain imports such as that of electronics will be required for export competitiveness,” Gurpratap S Boparai, MD of Volkswagen Group’s India businesses and companies (Skoda, VW, Audi, Lamborghini, Porsche) and two plants, told TOI.

The VW Group has two factories in India — at Pune and Aurangabad — and locally manufactures/assembles models from brands such as Skoda, Volkswagen and Audi. It also imports vehicles from Porsche, Lamborghini, apart from Ducati motorcycles.

Boparai said auto companies need a well-defined, long-term policy direction from the government, and not sudden changes to regulations.

Concerned over rising pollution, the government had advanced the implementation of stricter BS6 emission rules in India by a few years, completely skipping the BS5 standards. The new BS6 norms have been rolled out from April, even though the government has now shifted focus to electric vehicles, giving them an easier tax regime against petrol/diesel-run cars.

Many in the industry feel that the “excessive focus on electrics looks unjustified” as the industry has made heavy investments into BS6, and now needs to recover that before focusing on full electrics. Companies have been pitching for an easier tax policy for hybrids, which will allow them to aggressively push their petrol/diesel vehicles and utilise engine capacities.

On possible restrictions on parts imports from China, Boparai said it is difficult to implement and not practical. “We are a globalised world. Global supply chains are inter-dependent. If we want to be an exporter, we also need to import. You can’t say that I will not open my market to everyone, but I want everyone to open their market for me.”

He added that many suppliers in China are more competitive than here.