The Hindu Business Line : Honda plans Rs 3,000-cr investment in India

MR TAKEO FUKUI, President and CEO, Honda Motor Co, with Mr Brijmohan Lall Munjal (middle), Chairman, Hero Honda Motors, and the Managing Director, Mr Pawan Munjal, at a press conference in the Capital on Monday. — Kamal Narang

New Delhi , July 3

Terming India a market that would be more important than China in the future, Japan's Honda Motor Co on Monday outlined an aggressive expansion strategy for two-wheelers and cars, which would see the company invest Rs 3,000 crore over the next ten years. The company has invested the same amount over the last 20 years. Honda also said that it would enter the small car segment in India, for which it was mulling setting up a second production unit.

``In future, India will be a more important market for us than China,'' said the Honda Motor President and CEO, Mr Takeo Fukui. He listed rising population, high growth rates and democracy as factors that gave India an edge over China, though expressing concern over the labour issues in the country.

Plans new company

Honda now has four companies in India, three of them joint ventures. It plans to start a new company — Honda Motor India — that would help it co-ordinate requirements for components for various group companies.

The company said it would ramp up production capacities in both two-wheelers and cars in the coming years as it saw the market expanding at a quick pace. ``By 2010, we will have a two-wheeler capacity of 7-7.5 million in a market of around 12 million, while in cars we will raise production to 1,50,000 units, three times of what we have today,'' Mr Fukui said.

The company produces two-wheelers through joint venture Hero Honda Motors Ltd (HHML) and fully owned subsidiary Honda Motorcycle and Scooter India (HMSI).

May divest stake in Siel

For cars, it has a joint venture with the Siel group, Honda Siel Cars India (HSCI), where it plans to bring down its stake to 95 per cent from 99 per cent per cent by divesting equity in favour of the joint venture partner. Siel would be purchasing the stake for Rs 73 crore by the end of the year.

On the proposed small car, Honda today said it was ``seriously studying'' options to enter the biggest segment of the car market. ``We are studying and analysing entry into the largest segment of the Indian car market,'' said the Honda Motor Co South West Asia Head, Mr M. Takedagawa.

``We feel Honda has to follow what the Indian government indicates,'' he added, referring to the Budget proposal to cut eight per cent excise duty only on production of small cars to boost manufacturing in India.

However, Mr Takedagawa refused to specify a time frame for launch of a compact car.

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