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India to invite international bids for Maruti

India will invite international bids to ensure a competitive price for the sale of government's stake in the country's largest carmaker, Maruti Udyog Ltd.

"MUL has a strong strategic presence in the Indian market and its current year's losses should not be allowed to impair its sale prospects," Divestment Minister Arun Shourie said in Parliament on Friday.

The minister said there would be no panic selling of the stake in MUL, in which the government and the Japan's Suzuki Motor Corporation are equal partners.

The cabinet committee on divestment set up a panel on November 18 to discuss ways in which the government's equity in MUL could be best sold off.

International tenders will be invited once the committee makes its report, Shourie said.

According to the joint venture agreement with Suzuki, neither New Delhi nor the Japanese company can sell or transfer shares without the written consent of the other party.

Questioned as to why the government was selling its stake, Shourie said MUL had failed to bring out new competitive models and its market share had fallen from 83 per cent to 55 per cent in the last three years.

In the early 1980s, the firm launched a modern city runabout for the first time in India, where the market had previously been dominated by antiquated versions of British and Italian cars.

But the company has recently faced stiff challenges by new foreign entrants such as South Korea's Daewoo and Hyundai, as well as Honda of Japan.

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