Volkswagen, which has put on hold its INR20,000m investment plan in Maharashtra state, is exploring possibilities of setting up a car plant in Gujarat, an Indian newspaper said.

A consultancy firm working for the company met senior officials in Gujarat some time ago and was shown some locations in and around Ahmedabad and Vadodara, The Times of India reported. While the exact investment is not known, sources close to the development said it would be a smaller plant than some of the existing car factories in Gujarat. A Volkswagen spokesman, said the company was not looking to set up a new plant in India "as of now".

VW has put its expansion in Maharashtra on hold due to an unresolved issue over VAT refunds. In January, Volkswagen had announced investment in its India operations to ramp up capacity. The group currently has two manufacturing facilities at Chakan and Aurangabad in Maharashtra.

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