MFIL has undertaken to make an equity investment of Rs 1,727 crore ($ 411 million) with an equity share of Rs 1592 crore ($ 379 million) by Ford Motor Co of US. The joint venture has committed to achieve a 70 per cent indigenisation level by 1999-2000 as stipulated in the MoU policy. The project will witness a foreign exchange outgo of $ 110 million which will be neutralised during the next five years by way of export of cars and components.

Speaking at the Association of Indian Automobile Manufacturers Association (AIAM) annual session here on Friday, John G Parker, managing director MFIL, said "there should be a consistent and transparent auto policy for the next five years so that themanufacturers can plan investments hoping to get a sensible return in this time-frame". The government should adopt an integrated approach towards the sector and there should be cohesion between the ministries while addressing policy issues, he said.

Honda Siel Cars India Limited, Fiat India Automobiles Limited, Daewoo Motors India Limited and Mercedes Benz India Limited (MBIL) are the other joint ventures which have signed MoUs with DGFT.

MBIL signed the MoU with the DGFT on September 9. MBIL has put in $ 70.56 million as foreign equity till 1997-98. As per the MoU the company has already achieved 58 per cent indigenisation of components and has undertaken to achieve stipulated 70 per cent by the year 1999-2000. The company had earlier expressed its reluctance to sign the MoU with the government which prescribes an indigenisation schedule for auto companies, as it felt that the poor volumes would not justify the indigenisation level.

The joint venture intends to import parts amounting to $ 142 millionby 1999-2000 and achieve foreign exchange neutrality by way of equivalent export of cars by the year 2001-2002. Till date MBIL has exported 2,500 cars, according to company officials.

According to the MoU proposal, MBIL would be importing kits worth Rs 535 crore till the year 2000, out of which 1,350 kits would be imported within 1999 at a total cost of Rs 69 crore.

Daewoo Motors India Ltd which made an investment of more than $ 800 million signed the MoU with the DGFT in August 1998 with the objective of importing 60,000 kits of their new car called Matiz resulting in foreign exchange outgo of $ 98 million which will be neutralised during the next five years through export of components, cars and vehicles.

Earlier, Ind Auto Ltd had also entered into an MoU on July 10, 1998 for the purpose of importing kits worth $ 190 million in the next three years. This foreign exchange outgo was sought to be neutralised to be export cars and auto components by the year 2005-2006.

Honda Siel Cars India Ltd was thefirst company to enter into MoU in April 27, 1998 envisaging an investment of around Rs 850 crore the company sought to import more than $ 203 million worth of kits. The foreign exchange outgo was sought to be neutralised through export of cars and automobiles by the year 2007.