Peugeot may set up facility in south India

French car-maker Peugeot Citroen chairman Philippe Varin, along with a contingent of his top officials visited, Andhra Pradesh and Tamil Nadu to meet the heads of both the state governments besides checking out the site for its proposed car manufacturing plant in India.

The company, which is planning a two-million unit capacity plant for an investment of about $1 billion was to take a call this month on the project location based on the possible advantages, including incentives the two states offer.

However, officials here were given to understand that the company would take a final view on this only by June, 2011, i.e., after the new government in Tamil Nadu is in place.

The government officials in Andhra Pradesh were tight-lipped over the outcome of the discussions held by Varin with AP chief minister at the latter's official residence even as the company delegation proceeded to Tamil Nadu to meet deputy chief minister M K Stalin.

One of the reasons for postponing its decision, as sources

pointed out, was that the company's consulting firm has favoured Tamil Nadu over Andhra Pradesh and Peugeot is keen to take a final call only after the elections in that state are over.

Kiran Kumar Reddy is reported to have told Philippe the state would offer a stable policy support to the company irrespective of recent changes in political administration.

Meanwhile, Peugeot head visited a site at Tada on the Tamil Nadu borders in Andhra Pradesh and later visited a site at Vallam near the Nokia plant in Tamil Nadu, where the land was offered to the company by the respective governments, according to sources.

The two governments are vying for the car project leaving scope for a better bargain by the company.

Earlier, chief secretary of AP had given a letter to the company agreeing in-principle to allot over 800 acres nearly free of cost under a long-term lease arrangement along with a 21-year value added tax waiver for the project.