Skoda Auto India Ltd, the subsidiary of the Czech Republic-based Skoda Auto AS, has decided to import its Octavia passenger cars into India as completely built units (CBUs), instead of a previous plan to import the cars in semi-knocked down (SKD) form.
The company, a part of the Volkswagen group, has already received approval from the Directorate General of Foreign Trade (DGFT) for importing 1,500 units of the car, to be launched in the Indian market in September this year, sources said. However, the DGFT permission is for import of Octavias in the SKD form and not as CBUs.
An application has been filed with the Foreign Investment Promotion Board (FIPB). However, as a part of its comments, the administrative ministry has noted that the company is yet to set up a manufacturing unit despite having all regulatory approvals in place. Skoda has pledged to invest $56 million for its manufacturing operations.
A Skoda executive explained that the first few cars (1,500 units) will be imported since the manufacturing facility at Aurangabad is not ready to commence production yet. He blamed a recent government notification for the delay in the company's business plan.
"We received DGFT approval prior to the issuance of a customs notification (No. 62/2001, dated June 7, 2001) as per which the classification of the kit we wanted to import will no more mean 'SKD' but will be defined as CBU," he said.
"After the DGFT clearance, our headquarters at Mlada Boleslav has made arrangements for dispatch of the Octavia kit. However, such plans were put on hold following the June notification," he added.
The executive also said, to import SKD units of Skoda Octavia model in conformity with the revised definition and assembling the same in the country, major changes will have to be carried out in the assembly operations being set up by the company at Aurangabad in Maharashtra, and to achieve the same within the planned time was difficult.
Senior company executives recently met with officials in the Union commerce and industry ministry.
According to sources, the car maker feels that in view of the complexity and time constraint in setting up high technology assembly operations and procuring specially trained manpower, they have to start the operations initially by importing CBUs. Skoda will, however, not undertake any retail activity for the said imported cars.
