General Motor, the world's largest car manufacturer, has sought government permission to infuse an additional Rs 600 crore equity into its Indian subsidiary, General Motors India.
The money will be used to meet working capital needs and fund new projects. GM's new businesses include import and sale of completely built units (CBUs) of passenger cars (the Vectra project) and development, manufacturing and marketing of a multi-utility vehicle (MUV).
The company has fully invested its initial authorised capital. It has already invested Rs 760 crore out of the already permitted investment of Rs 780 crore, a senior company executive said today. "We need funds to expand our business. Hence, we are infusing Rs 600 crore into the Indian operations," he added.
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General Motors India has also sought permission from the Foreign Investment Promotion Board (FIPB) for payment of royalty to its parent, the executive added. He declined to give details about the royalty payment plan.
The case will be considered by FIPB in the next ten days, government officials said. The case has to be veted by the ministry of heavy industry -- the administrative department for automobiles.
GM could have taken the automatic route (the Reserve Bank of India), thus avoiding the FIPB route, since there is no change in the shareholding pattern. But since a fresh investment of Rs 600 crore is required, the proposal will be first cleared by the commerce and industry minister following recommendations from FIPB and the Cabinet Committee on Economic Affairs (CCEA).
As per the existing FDI policy, all FDI proposals involving a project cost of Rs 600 crore or more has to be cleared by the CCEA.