Hero MotoCorp plans to increase the production capacity of its factory in Bangladesh seeing the huge growth potential of the country's automotive industry, said its chairman Pawan Munjal.

In 2016, Hero set up a motorcycle manufacturing plant in Jashore in what was the Delhi-based motorcycle and scooter manufacturer's first overseas venture.

Over the past four years, more than 250,000 motorcycles were manufactured at the factory, which has an average production capacity of more than 100,000 vehicles per annum.

"Compared with any other emerging country, Bangladesh has the fastest growing automotive industry. To meet the growing demands, we will increase the production capacity of our factory," Munjal told The Daily Star in an interview recently.

The sales of motorcycles increased 13 per cent in 2019. But the growth rate was higher previously, according to industry insiders.

The sudden change in regulations is one of the biggest challenges faced by Bangladesh's automotive industry, which is the third largest in South Asia.

A set of regulations are changed when the government announces its yearly fiscal budget in June. Besides, the Statutory Regulatory Order (SRO) also brings changes on taxes.

"We need consistent policies from the Bangladesh government," Munjal said.

When Hero began its manufacturing in Bangladesh, there was a specific set of rules. With time though, rules changed and the company was subsequently affected.

However, Hero's venture in Bangladesh has remained profitable and continues to grow.

"More than 500 people are directly employed in our company while a number of others are indirectly employed," he said, adding that Hero have a market share of 20 per cent.

Hero is also considering whether to export some of the vehicles made at their Bangladesh factory.

In 2011, when Hero began its solo journey after separating with Honda, the company had only three factories and were exporting to just four countries: Bangladesh, Nepal, Sri Lanka and Colombia.

"Today, with eight factories, including the one in Bangladesh, we export to almost 40 countries in Asia, Africa, Central and South America."

Innovation was the key to retaining consumer interest, so Hero expects more of the same from its global partners.

Although Pleasure, a scooter model sold by Hero, is available in Bangladesh, the demand for such vehicles is very less in the country.

Scooters account for only 1 per cent of the total demand for two-wheelers in Bangladesh, while motorcycles make up the rest, Munjal said, adding that 65 per cent of the two-wheeler market in Sri Lanka is cornered by scooters.