MUMBAI, July 7: German carmaker Volkswagen (VW) has offered the State Industrial Corporation of Maharashtra (Sicom) a minor stake in its proposed car project. State government officials, however, reiterated that talks were only at an informal stage and a lot of spadework needed to be done before making any commitment.

"We need to appraise the proposal before coming to a decision. If it is feasible, we may consider such a move," they said. Volkswagen is also said to be on the lookout for a suitable Indian partner as no final decision has been taken yet on the tie-up with the Eicher group, whose equity participation is said to be confined to 26 per cent.

The German carmaker has indicated to the Maharashtra government that it will convey its choice of the site by July 15. The state has offered "prime land" at Ranjangaon near Pune, which is fast developing into an automobile complex. Volkswagen has also been eyeing Tamil Nadu, but sources say that it is inclined to settle for Mahahrashtra.

Volkswagen is keen on kicking off with the Audi A6 and the Octavia, followed by Felicia at a later date.

While production of the A6 will be 5,500 cars, the combined output of the Octavia and Felicia is estimated at 60,000 vehicles.

The two cars are products of Skoda, the Czech auto manufacturing company, which was taken over by VW in 1991.

Sources say volumes of the A6 are being restricted as it is an upmarket vehicle, on the lines of the Mercedes, where demand will be confined to a niche segment.

The Skoda Octavia, being brought ahead of the Felicia, will be available in a 1.3-litre petrol and 1.6-litre diesel engine. The more contemporary Felicia is proposed to be fitted with a 1.3-litre petrol engine and two diesel engines with capacities of 1.6 litres and 1.9 litres each.

In the meantime, Maharashtra is wooing other auto majors to set up thier projects here. The list includes Fiat of Italy for its Palio project, John Deere of the US for tractors in a partnership with Larsen & Toubro and Escorts for tractors. Fiat is, reportedly, keen on Aurangabad which offers other facilities like an airport.

Apart from Ranjangaon and Aurangabad, other spots are also being developed as auto hubs for the state.

These include Chakan and Talegaon near Pune and areas in the vicinity of Nashik. Two-wheeler major Bajaj Auto is keen on setting up its third plant in Chakan for manufacturing its latest range of scooters.

As part of its endeavour to encourage more players, Maharashtra has planned a package of incentives on the lines of other states, especially Tamil Nadu.

For instance, sales tax exemption will be granted for 14 years to projects with an outlay of between Rs 300 crore and Rs 1,000 crore; 17 years for investments between Rs 1,000 crore and Rs 2,000 crore, and 20 years for projects costing more than Rs 2,000 crore. Other incentives will be considered on a case-to-case basis, officials say.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.