CHENNAI: French auto major Peugeot-Citroen has firmed up plans to re-enter the Indian market. The company will invest around Rs 4,000 crore in an integrated manufacturing facility, which will make three lakh cars a year. The plant will come up in the Sriperumbudur region near Chennai.
Peugeot exited India in the 1990s after poor showing of its model 309 and worker agitations at its factory in Maharashtra. The company has been scouting for locations to set up its plant and had shortlisted sites in Andhra Pradesh (Sri City in Tada) and Tamil Nadu. With this proposed investment, Chennai is set to become one of the largest automobile manufacturing hubs in the world.
Gregoire Olivier, CEO (Asian operations), Peugeot, and Frederic Fabre, managing director of PSA Peugeot India project, along with other senior officials met Tamil Nadu chief minister J Jayalalithaa on Wednesday and sought fiscal incentives for the project. The support of the state may include tax benefits and land allocation at subsidised rates. The Peugeot project will provide direct employment to about 5,000 persons and indirect employment to another 15,000 people.
The state already is home to automobile biggies like Hyundai, Ford, Nissan, Renault, Daimler,BMW and other global marquee manufacturers. Besides, the eco-system of a range of component manufacturers makes the state an ideal destination for automotive investments. Government officials say that Chennai and its adjoining areas have an installed capacity to make 2.2 million vehicles ayear.
The upcoming tractor units of Mahindra & Mahindra in Cheyyur and Polysindo group’s plant at Gangaikondan will only strengthen the state’s grip on automotive investments. Not just automobiles, but in tyre manufacturing too, the state is a leader. It has attracted major investments from Michelin, JK Tyres, MRF, ATC and Apollo Tyres.
The total capacity in tyre manufacturing in Chennai region exceeds 1,600 tonnes per day, thereby making it the largest tyre manufacturing centre in the country and one of the largest in the world. From an R&D standpoint too, the state already has research hubs for Daimler, Renault-Nissan, Visteon, M&M and Ashok Leyland. “The combination of talent, ecosystem and port location makes Chennai the indisputable location for automotive investment.
There are some bottlenecks like poor power situation and congested ports. If these are addressed, there is scope for further fresh investments and also secondary investments from existing players,” an analyst said.