A proposal to extend number of tax incentives on HMSI (Hero Motorcycles and Scooters India), Honda Motor Corporation’s subsidiary, has been approved by Karnataka State Cabinet. HMSI has announced that it will be setting up a new manufacturing facility for two wheelers in Kolar District, Narasapur Industrial Estate which is 52km from Bangalore. The massive plant will have 1.8 million units production capacity annually. This facility will be the HMSI’s first in South India and third in the country.
The Karnataka government is ecstatic about HMSI investing 1300 crore and has decided to convert VAT (Value Added Tax) of 40 percent into a 10 year interest free loan repayable from the 11th year over the next 10 years. HMSIs 95 percent central sales tax of the company will be reimbursed for a 5 year period and the company will also receive benefits and exemption on stamp duty and registration on land deal. In its proposal HMSI has indicated that over 15,000 indirect jobs would be provided with the establishment of the new manufacturing facility.
Other two HMSI plants in India are situated in Manesar, Haryana and Tapukara, Rajasthan. They have an annual capacity to manufacture 1.6 million and 1.2 million units respectively. Honda Motorcycles India portfolio includes, six motorcycles (CBR250R, CB Unicorn Dazzler, CB Unicorn, CB Shine, CBF Stunner, and CB Twister) and three motorscooters (Aviator, Dio and Activa). One more motorcycle will be added next month, when Honda launches CBR150R.
Honda is struggling to keep up with demand in India. Their products carry a waiting period of upto six months. In order to speed up manufacturing process and bring down delivery time, Honda Motors India will be building their third plant in Karnataka.