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May 1, 2001
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Money > Business Headlines > Report May 1, 2001 |
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Govt clears completely built car importsPartha Ghosh & Swati Prasad Following relaxations in the import policy in the post-QR scenario, the government has for the first time allowed import of completely built cars. The Foreign Investment Promotion Board last week approved Mercedes Benz India's proposal to trade in completely built units of its passenger cars in India. It also approved the proposal of Daimler Benz, Germany, to increase shareholding in MBIL from 86 per cent to 100 per cent by acquiring the equity held by Tata Engineering. The government's approval for the import of completely built units has, however, been given on the condition that MBIL will not undertake retail trading of these cars. The same proposal was rejected at an FIPB meeting held on February 1, 2001, on the ground that "the activity amounted to retail trading, which is not permitted under the present FDI policy." Later, the company clarified that it planned to import the cars for onward sale to its wholesale dealers who will in turn sell them to the retail customers. In view of this, MBIL's trading will be mainly in the nature of wholesale trade with 100 per cent advance payment. The government has permitted FDI in wholesale trading. MBIL also stated that import of CBUs was part of its strategy to meet the challenges arising out of lifting of the quantitative restrictions on trade from April 1, 2001. The company has analysed the expected market behaviour in the future and, therefore, has decided to introduce newer models, including C class, involving latest technology, for manufacture in India. Meanwhile, the government has also approved MBIL's proposal to increase Daimler Chrysler AG's stake in the company from 86 per cent to 100 per cent. This has been achieved by way of transfer of Tata Engineering and Locomotive Ltd's 14 per cent equity contribution of 84 million equity shares of Rs 10 each in MBIL in favour of Daimler Chrysler AG. According to a company spokesperson, MBIL is also studying the possibility of bringing the M-class -- multi-utility vehicles -- into India. However, MBIL will look at producing/assembling only those models in India for which there is a demand for at least 500 units in a year. The company hopes to recover the additional investment made in buying out Tata Engineering's stake (Rs 850 million) within the next three years or so. Powered by YOU MAY ALSO WANT TO READ:
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