The European Investment Bank (EIB) is providing EUR 100 million to VW India Private Ltd., a subsidiary of the VW Group, to part-finance a new car manufacturing facility in the state of Maharashtra, where the company will produce three models of small cars specifically adapted to the Indian market. The financing contract was signed in Luxembourg today.
EIB Vice-President Carlos da Silva Costa highlighted that “this loan clearly responds to a three-fold strategy: to promote the Lisbon Strategy, by reinforcing the competitiveness of European companies; to support a climate change agenda, by improving the environmental standards of production; to contribute to wealth and job creation in the partner country where the project is promoted. This loan supports an increased EU presence in Asia, in this case by financing investments of a leading European car manufacturer in India. These investments involving transfers of technology and know-how from Europe will lead to producing and offering cleaner cars for the Indian market. The project will introduce technologies entailing environmental benefits in terms of lower emissions of greenhouse gases, and, simultaneously, will contribute to the economic development of India, a strategic partner of the European Union (EU), through the direct creation of 2 500 jobs and additional creation of highly-skilled jobs amongst local supplier companies.”
VW is already present in India, where it operates an assembly plant in Aurangabad. The project will allow VW to increase its current market share, still small, through local production of its smaller mass-market models, specifically adapted to an emerging market environment, reflecting customer preferences and the need for very low unit costs.
The new models will be equipped with modern engines, providing the most efficient low-emission technology compatible with the local fuel quality. The project will enable VW to manufacture in India vehicles that comply with tighter legislation on emissions of greenhouse gases that will be introduced by India from April 2010 onwards (Euro 4-equivalent to be introduced in Delhi and 10 other major Indian cities).
The EIB is extending this loan in the framework of the current lending mandate for Asia and Latin America (ALA IV), covering the period 2007-2013. Under this mandate the EIB is authorised to lend up to EUR 3.8 billion for financing operations which support the EU’s presence in those regions through foreign direct investment or the transfer of technology and know-how, or which contribute to environmental sustainability.
Background information:
The European Investment Bank is the EU’s long-term financing institution promoting European objectives. Set up in 1958, the EIB operates in the 27 EU Member States and more than 130 other countries in Asia and Latin America, the Balkans, the Mediterranean region, Africa, the Caribbean and the Pacific. Lending operations outside the EU are part of the EU co-operation policy with third countries.
Since 1993 the Bank has carried out four successive lending mandates for Asia and Latin America. The EUR 3.8 billion regional ceiling of the current mandate (ALA IV) is broken down into indicative sub-ceilings of EUR 2.8 billion for Latin America and EUR 1 billion for Asia.