Honda to invest in a new bike plant in India

Hero Honda Motors Ltd., India's top bike maker, will invest 19 billion rupees to set up a new bike plant at Haridwar in Uttaranchal state, 200 kilometres northwest of New Delhi. The Japanese firm is said to have a 26-per cent stake in the plant.

Honda already has a dominant share in the fast growing Indian market and plans to expand it with this investment. In an attempt to boost its output in India by 50 per cent, Honda will invest in a factory which will have an annual production capacity of 1.5 million motorbikes. The proposed plant will have an initial capacity of 500,000 bikes, but that will be raised to 1.5 million by 2010, according to a company statement.

The first phase of construction of the plant through next may will have Hero Honda and its parts suppliers spend three billion rupees to enable the new plant to turn out 500,000 units a year. Reasonably priced 100cc-class models will be produced in the factory.

Hero Honda currently has two plants in Haryana and plans to expand them in order to boost the firm's annual capacity to 3.9 million motorbikes by September. The Uttaranchal plant of the company seems to be getting primacy over a proposed plant at Jaipur, where the company was facing problems.

The hill-state will offer Honda a 100 per cent excise exemption for 10 years and 100 per cent income tax exemption for the first five years and 30 per cent for the next five years.

Hero Honda plans to offer its customers the world’s best technology through an unparalleled range of state-of-the-art-two-wheelers. Seven new models have been planned to be launched this year.

“Keeping in line with our philosophy of contributing to the growth of the Indian economy, the new plant will help generate substantial employment opportunities for people in and around the region” company chairman Brijmohan Lall said in a statement.