The Hindu Business Line : 50% export obligation on Suzuki-Maruti foundry

SUZUKI Motor Corporation (SMC) and Maruti Udyog Ltd (MUL) will have to undertake a commitment of exporting 50 per cent of the output from their proposed joint venture aluminium foundry project.

The Development Commissioner for Small-Scale Industries (DCSSI) has imposed a mandatory 50 per cent export obligation on the proposed joint venture company because the foundry will be manufacturing items that are otherwise reserved for the SSI sector.

Suzuki, in the last week of September, had applied to the Foreign Investment Promotion Board (FIPB) seeking permission to manufacture aluminium castings by way of setting up a joint venture company with Maruti.

As per the plans, the joint venture company will have an authorised capital of Rs 30 crore and a paid-up capital of Rs 25 crore in which Suzuki will hold 51 per cent of the equity capital while Maruti will hold 49 per cent.

The company, in its application filed with the Government, had conveyed that it would undertake the manufacturing of aluminium castings for various applications in India, including those required for the manufacture of two-wheelers.

Since a large number of items manufactured by foundries qualify for SSI reservation, the opinion of DCSSI was sought by FIPB following which the DCSSI said that pressure die castings up to 0.75 kg was reserved for the small-scale sector and would accordingly attract the SSI conditions of industrial licensing and minimum 50-per cent export obligation.

However, the Ministry of Heavy Industries, the administrative Ministry for the automobile sector, is yet to clarify its stand on the foundry proposal.

Five years ago in 1997, the two companies had expressed interest to set up a joint venture aluminium foundry. However, at that time, the Government had felt that since aluminium castings were already manufactured in the country, there was no need to install additional capacity.

Earlier this year Suzuki had been permitted to set up a two/three-wheeler manufacturing facility in India.

The company is scheduled to roll out its first two-wheeler model in the country when its coolingoff period, as per its agreement with the TVS group of companies, ends. Suzuki and TVS had a joint venture agreement for manufacturing two-wheelers in India, which broke off last year.

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
SEBI tells Grasim to hold L&T open offer

VSNL, BSNL resolve interconnect row — Revised revenue-sharing pact to be signed

Clearing Corpn to launch free forex platform

CMC scrip slide queers sale pricing

50% export obligation on Suzuki-Maruti foundry

False start at Dunlop Chennai unit?
Workers restive on management stand