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Germany’s Volkswagen group has started to pump in fresh investments to the tune of nearly Rs 8,000 crore for a India fightback, and group company Skoda — that will lead the charge — says it will launch four new cars in the market, taking on models from Maruti, Hyundai and Tata Motors

However, just as it expands in India and gets deeper with localisation, Skoda has also said that the government should allow easier import of parts and do away with special tax benefits reserved only for cars under 4 metres.

“It (tax breaks for small cars) has lived its utility and should be done away with,” Thomas Schaefer, chairman of Skoda’s global board, told TOI ahead of the unveiling of the company’s first mass-localised SUV Kushaq that will take on models such as Hyundai’s Creta and Kia’s Seltos.

Schaefer said the Volkswagen group is eyeing a 5% share of the Indian market by 2025, mainly led by Skoda and VW brands for volumes while luxury ones such as Audi, Porsche and Lamborghini also chipping in (failed in previous target of 20% by 2018).

The Indian market, while being a top global opportunity, remains challenging, and Schaefer said that the company will get in cars that are competitive, “including on prices”.

“We compete with brand such as Hyundai at a global level, and it will also be a key competitor in India. We will surely convince people into our cars.”

Just as Skoda develops and sells highly-localised models, VW will also look at a similar new model blitzkrieg and these would be developed around local pricing and needs.

Schaefer said Skoda is also looking into some of the highly-lucrative segments such as compact SUV. “It’s a tough segment… and you need lots of work to get it right. We are not quite sure whether it will be a hatch, or a crossover or an SUV. We are not quite sure.”

Speaking about the special tax (GST) dispensation that cars under-4-meters get in India, he said that “while we need to live with this regulation for now”, it doesn’t make sense to continue with the incentive. “It might have served its purpose. Maybe it’s better to focus on emissions, and consumption. There are other ways of supporting development. Why 4 meters?”

Also, he said that while localisation is important, the Indian government should also make it easier for companies to import some critical parts from global manufacturing locations.