GMI has in a memorandum pleaded that to remain competitive in the market, it has to widen its product portfolio, introduce new models and make further investments. It argued that such future investments were not covered for incentives under the Prestigious Unit Status (PUS) as per the State's industrial policy for 1990-95.

General Motors Asia-Pacific executive director Ron Frizzle during his meeting with chief minister Keshubhai Patel and industries minister Suresh Mehta recently expressed desire to manufacture its future `Corsa' small cars and yet-to-be-named utility vehicles at Halol facility.

According to official sources, GMI has sought exemption from electricity duty for a period of further five years. The exemption was first grantedfor a period of five years from the day of commencement of production, lapsing on June 21, 2001, following which it would have to incur an additional burden of Rs 70 lakh per annum.

GMI also asked for converting preferential shares totalling Rs 35 crore, provided by Gujarat Industrial Investment Corporation (GIIC) as financial assistance, into a loan after five years from the date of final disbursement. GMI has already received the entire disbursements except the fifth and final disbursement of Rs 7 crore, due in March 2000.

As per the agreement, these preferential shares were to be converted into a loan attracting interest of 16 per cent after one year from the final disbursement date.

The GMI contention is that automobile projects of this size have a long gestation period and it would not be possible for GMI to service the loans due to intense competition in the auto sector.