What was the real underlying reason Volkswagen halted investments in India? Even before it started its venture of building a factory, the Indian Government is using backdated tax laws to fine Volkswagen US#1.2 billion for tax evasion. India is claiming that US$1.2 billion over a 12-year period, over imports which had already been cleared before by Indian Authorities.
To put that in perspective, Volkswagen's initial investment was US$1 billion, which was reduced to US$700 million over other issues with partners. That backdated tax bill is more than the investment that Volkswagen wanted to invest in India. Think about that.
Volkswagen should just forget about investing in India and pull out completely just like China ditching its investments in nickel production in Indonesia. When the time comes, everything will fall into the hands of the Indian partner.
Anonymous
To put that in perspective, Volkswagen's initial investment was US$1 billion, which was reduced to US$700 million over other issues with partners. That backdated tax bill is more than the investment that Volkswagen wanted to invest in India. Think about that.
Volkswagen should just forget about investing in India and pull out completely just like China ditching its investments in nickel production in Indonesia. When the time comes, everything will fall into the hands of the Indian partner.
Anonymous
Pokey Sharma is more interested in poking China's collapse than India's own affairs. She has been shouting on her dung heap that China's AI is collapsing, paying little attention to what is happening in the USA and what the USA is doing to India.
ReplyDeleteData centers and AI investments are in trouble in USA, mainly due to competition from Chinese AI and its own power shortages. Massive investments do not equate to massive earnings going forward, because using them is expensive and restrictive. Which is why laws are now being enacted to keep out Chinese AI. It is not going to kill off Chinese AI competition for sure, as elsewhere in the Global South usage of Chinese AI is rising. Even USA entities are using Chinese AI for its affordability without being much inferior to those created by investing hundreds of billions. Who will survive is clear to see.
The chips war is beginning to result in backfiring for the USA, Japan and South Korea. China is pushing resources into development of chips, mainly memory chips that Samsung and Hynix dominate today. That is going the way of Internal Combustion Engine cars, shipbuilding and electric and electronic equipment. China's rise in those sectors is not by chance or luck but by intention, and when China resorts to intention, others had better be prepared. But it is their own making trying to strangle China. As they say, necessity is the mother of invention, and no one does it better than China.
Volkswagen is at wits end; no fish prawns also can, by investing in India. Now prawns are cheaper than fish anyway.
ReplyDeleteIn the past seven years, about three thousand companies have already left India, so what is the lure? Well, just like what happens everywhere, someone leaves and another takes over the shop space as soon as possible hoping to cash in. Sure, while some leave, others may have decided to go into India, but the investment money falls short of what had been taken out, and foreign direct investment shows a negative picture.
In China, Volkswagen sales have been plunging. Volkswagen is probably looking at the Indian market going forward, but that is dependent on whether India is able to produce enough middle-class citizens to afford a car. In fact, this is the bet of most companies trying to shift production to India. But lifting most Indians out of poverty is not that easy and trying to imitate China is a hard act to follow and near impossibility.