Hyderabad, Nov. 20: The Andhra Pradesh government has decided against any legal action for now against German automaker Volkswagen, which veered course from the state to set up its proposed plant in India at Chakan, Maharashtra.

Couching his disappointment with disdain at the company, chief minister Y.S Rajasekhara Reddy said the absence of ancillary units was behind the loss of the prestigious project to Maharashtra.

However, Reddy ruled out immediate legal action against the German giant. “We have to consider the impact of such actions (litigation) on the environment of investments,” he said, adding that legal action, if any, will follow later.

He said: “We cannot stop Volkswagen from setting up the project anywhere in the country. The only difference in this case is that there was a written commitment followed by a financial transaction.”

In 2005, the state government had invested two million euros (Rs.11.5 crore ) in an SPV Vasistha Wahan floated by Helmut Schuster, the then official representative of Volkswagen in India.

The state chose Vishakpatnam for the plant and had even shown the Volkswagen team a 350-acre site in the coastal city. To assuage any misgivings over vendors, the state also mooted an alternative at Tada in Nellore district, close to the complex for ancillaries in Tamil Nadu.