Peugeot plans to set up unit in Tamil Nadu

French car maker PSA Peugeot Citroen has submitted a proposal to the Tamil Nadu government for setting up an integrated automobile project at an investment of Rs 4,000 crore (Rs 40 billion).

A delegation from PSA -- including Gregoire Olivier, chief executive officer of Asian operations for PSA Peugeot Citroen, China, Frederic Fabre, managing director of PSA Peugeot Citroen India project, and Jitesh Gadhia, senior managing director at Blackstone -- met Chief Minister J Jayalalithaa.

During the meeting, industry minister S P Velumani was also present.

It may be noted that Business Standard had earlier reported that PSA was planning to invest in Tamil Nadu. Last week, it had reported that a high-level team from the company would call on the Tamil Nadu government soon.

Headquartered in Paris, PSA is the second-largest automaker based in Europe. It is also the world's sixth-largest automobile manufacturer.

In 2010, it had reported a sales turnover of $67.3 billion (Rs 3,09,556 crore).

While company officials did not comment, a release issued by the state government stated PSA was eager to establish a car manufacturing facility with an initial capacity of three lakh units per annum.

The facility would cater to both Indian and overseas markets.

PSA has proposed to establish this project as a 100 per cent subsidiary of the parent company. After evaluating sites in various states, PSA has selected a site near Sriperumbudur.

The state offers a mature eco system, with auto components supply base, abundant availability of skilled manpower, port logistics, etc.

Another French car maker, Renault, has set up a manufacturing facility, along with Japanese company Nissan, at Oragadam near Sriperumbudur.

PSA's project is expected to provide direct employment to about 5,000 people and indirect employment to another 15,000.

It will also help attract number of French auto component manufacturers, triggering a multiplier benefit to the state economy.

PSA was among the early entrants to India way back in 1993-94 with 309 model.

However, it was bogged down by problems, including labour strife at its Kalyan plant, near Mumbai, shortage of completely knocked down kits, liquidity crunch and finally a legal spat with its local partner. Peugeot won the case, but then stunned industry circles by deciding to call it quits in November 1997.