The Hindu Business Line : Volkswagen committed to setting up plant in AP, says CM

VOLKSWAGEN AG is committed to setting up a car manufacturing plant in Andhra Pradesh, said the Chief Minister, Dr Y.S. Rajasekhara Reddy. The project has been dogged by a payment scandal involving a former representative of the auto major in India.

"Volkswagen's commitment to India and Andhra Pradesh project is irrevocable," he told reporters. He said that matters relating to the payments controversy have been sorted out and that a team of State Government officials would visit Germany next month to firm up plans for the project.

Speaking at an interactive session organised by the Forum of Financial Writers, Dr Reddy said that the State Government had been assured by a representative of Volkswagen — a former German Ambassador to India — who was in Hyderabad recently, that the project would go on. The representative had assured the State Government that the German company was keen to execute the project in Andhra Pradesh itself, he said.

Dr Reddy said that the company had agreed to repay Andhra Pradesh Rs 11 crore, which the State Government had invested in a fictitious special purpose vehicle, Vashishta Wahan, on the instructions of a former company executive. The executive, subsequently, misappropriated the money.

About the investment climate in Andhra Pradesh, he said that the State Government was focussing on making the State an investment hub and would be setting up a greenfield modern port at Gangavaram and Special Economic Zones (SEZ) at Visakhapatnam and Kakinada. "The State secured highest annual Plan outlay among States of over Rs 15,000 crore this year and would also set up pharma city at Visakhapatnam, apart from the greenfield international airport in Hyderabad," he said.

He said that the administration was giving special emphasis to carry out "reforms with a human face" and had virtually doubled allocation for irrigation projects. With an improved monsoon and good farm prospects this year, not a single case of farmer suicide had been reported in the last eight or nine months, he said. In order to improve infrastructure, the Government would construct an eight-lane outer ring road around Hyderabad to decongest the city.

Dr Reddy said that two SEZs were coming up at Kakinada and Visakhapatnam, with investment from ONGC and HPCL respectively.

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