Volkswagen AG, the German automobile company said it has put on hold the Rs 2,000 crore investment plan in India as the VAT refund issue with the Maharashtra government remains unresolved, the news reports said.

According to Volkswagen Group Chief Representative India John Chacko said, “The normal investments required for usual operations of the company is going on but the big plans for the future have been put on hold at the moment.”

Earlier, to encourage investors, the state government used to refund VAT paid on all the vehicles sold by the companies which have factories in the state. But it was modified last year and the state government said it would refund VAT only on vehicles sold within the state.

The group wants the state government to keep its commitments and is also discussing with the government to sort out the issue. This year in January,

Volkwagen AG said it will invest a minimum of Rs 2,000 crore on its Indian operations by 2013 to ramp up the capacity, launch new models and strengthen research activities.

Meanwhile, in 2008, the group announced an investment of 580 million euros to set up the plant at Chakan. It has stated that it planned to hike capacity of the Chakan plant to 1.3 lakh units annually from 1.1 lakh cars this year.

Volkswagen Group is a German multinational automotive manufacturing company based in Wolfsburg. It is the second-largest motor vehicle manufacturer by 2011 unit sales and the largest based in Europe. 

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