BMW puts India plan on hold

BMW is presently operating through its dealers in India who import and market completely built units of its cars. It may be recalled that BMW was planning to set up a 50-50 joint venture with the Hero group to manufacture the BMW AG and Rover group range of cars in India. Initially, the company would be producing the BMW 5-series here, besides, rolling out the 3-series and the 7-series in the country.

The project has been hanging fire with the Directorate General of Foreign Trade DGFT for quite some time now.BMW had sought permission to lower the minimum level of foreign equity investment to 35 million dollars from the existing 50 million dollars as proposed in the Indian auto policy. This seems to be the only bone of contention for DGFT to reject the proposal.Under the original application filed with the foreign investment promotion board FIPB, BMW had sought a majority stake in the venture. It was seeking a 51 per cent holding in the company which has now been reduced to an equal joint venture.

The joint venture company 8212; BMW India Limited 8212; also intended to purchase components from the country and export cars subject to the condition that they meet BMW standards.

As per the original application submitted on March 29, 1996, the joint venture company was proposed to be a complete production base with an authorised equity capital of Rs 240 crore just for the BMW 5-series. The capital investment for the 5-series was stated to be Rs 270 crore and plant was supposed to have an annual capacity of 10,000units. Besides, 520 jobs were likely to be created by the project.

BMW AG was to provide the technical support for making the cars in India. Besides the 5-series, the joint venture company had also decided to look into manufacturing the 3-series and other models in the BMW stables as well as the Landrover, Rover cars and motorcycles.