PEUGEOT CAR MANUFACTURING UNIT ON SRISAILAM HIGHWAY

THE Andhra Pradesh government on Thursday went all out to woo French car maker Peugeot, with chief minister K Rosaiah formally asking the French government to convince the automobile firm to set up its manufacturing firm in the city.

“The Andhra government has offered to allocate around 800 acres of land near the Shamshabad airport to Peugeot along with a ‘suitable’ package of fiscal incentives and infrastructure benefits,” Sam Bob, principal secretary (industries), told ET. An indication that Peugeot was inclined to setting up a facility in Andhra Pradesh came from a French delegation led by trade minister Anne-Marie Idrac during their meeting with the chief minister.

The technical teams of the company have already selected Hyderabad after assessing other locations. Peugeot began evaluating locations for its car project in India a few months ago. The company is understood to be looking at an investment of Rs 1,500 crore for the project. Tamil Nadu was also on the company’s radar, amid expectations that Peugeot will roll-out low cost cars in emerging markets like India by 2010. It is also not clear whether the French auto major will bring in the Peugeot or the Citroen brand first.

The global slowdown in the automotive sector has delayed the expansion plans of several car makers including Peugeot. The trade minister is understood to have communicated to the Andhra chief minister that the carmaker is yet to take a decision on the timing of the investment, though Hyderabad figured as their top choice.

Decisions on product portfolio is expected to be taken after the finalisation of the location. But, the company intends to launch both Peugeot and Citroen products in a limited timespan,” said a person familiar with the development told ET earlier.

“We have firmed up the incentives to be given to Peugeot if they set up their facility here. However, the company is yet to furnish a detailed project report,” said Mr Bob.

If the French carmaker decides to set up its facility in the state, it will be the first major investment by an automobile maker in Andhra. Several attempts were made to woo other car makers including Tata Nano. The state had offered a Rs 300-crore cash compensation to Tata Motors for re-locating Nano from Singur and setting up an integrated plant here.

To sweeten the deal, it also offered 1,000 acres of free land in Hyderabad, Vizag, Hindupur and Tada in Nellore district, and a slew of fiscal incentives making investment on the project virtually free. But the car eventually rolled out from Sanand in Gujarat.

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