NEW DELHI, April 28: Honda Siel Cars India Ltd has signed a memorandum of understanding (MoU) with the government, making it the first joint venture company to do so in accordance with the revised automobile policy.The MoU was signed here on Monday. The company has already set up its manufacturing facility at Greater Noida in Uttar Pradesh and launched the "City" in February this year. The benefits that will accrue to the country from such ventures consist of development and growth of auto ancilliaries and auto component units, foreign equity and technology inflow and potential for exports from these ventures.
Under the MoU policy, car manufacturing companies can import components in completely-knocked down (CKD) and semi-knocked down (SKD) form for the manufacture of passenger cars against a licence issued to them.
The revised policy announced on December 12, 1997, laid down certain parameters. It is understood that Honda Siel's MoU broadly satisfies the conditions as stipulated by the policy.
Therevised parameters include:
Establishment of actual production facilities for the manufacture of cars and not mere assembly of kits. A minimum foreign equity of $50 million to be brought in by the foreign partner within the first three years, if the joint venture involves majority foreign equity ownership. Indigenisation of components up to a maximum level of 50 per cent in the third year or earlier and 70 per cent in the fifth year or earlier.Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
