Company to take final call on location of its proposed $1-bn car project in June
The Andhra Pradesh government on Saturday constituted a taskforce with heads of six departments led by the chief secretary to facilitate the establishment of mega manufacturing projects in the state.
The move follows a specific assurance given to French car maker PSA Peugeot Citroen by chief minister N Kiran Kumar Reddy.
Peugeot chairman Phillippe Varin, who visited the state on March 15, told Reddy that the company would take a final call on the location of its proposed $1 billion car project in June this year.
The company had announced its intent to reenter the world’s seventh largest car market last year and had shortlisted the two southern states of Tamil Nadu and Andhra Pradesh as possible locations for setting up the manufacturing facility.
Though it was to announce details of the project in March this year coinciding with Peugeot chairman’s visit, the company postponed its decision owing to Assembly elections in Tamil Nadu. Varin besides meeting the heads of two governments also visited the proposed locations.
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In continuation of his meeting with the chief minister, Varin wrote a letter in the first week of April requesting the state government to ‘prepare the needed road map.’
CM’s response
In response, Reddy informed the Peugeot chairman through a letter on April 16 that he would be constituting a taskforce to do the needful in view of the concerns raised by Varin over certain challenges in having the required social and other essential infrastructure at the proposed location at Sri City in Chittoor district near the Tamil Nadu borders.
However, the orders issued for constitution of the taskforce made no specific mention of the proposed project, apparently in line with the government's intention to treat the whole process as a general matter as it termed the purpose of the move was “to have negotiations with promoters of mega projects to establish manufacturing projects in AP.”
The taskforce comprises principal secretaries of the departments of finance, energy, transport, roads & buildings, irrigation, revenue and managing director of AP Industrial Infrastructure Corporation (APIIC) as members while the principal secretary, industries and commerce, will act as member convenor.
In his letter, the chief minister also reminded the Peugeot chairman that the state had provided the best possible incentive package offered to any industry by it so far.
Incentives to Peugeot
The government has offered over 800 acres of land on a long-term lease at Re 1 per acre along with waiver of VAT for 21 years to the project among other incentives.
Company’s new head of Indian operations M Frederic Fabre is scheduled to visit to the state again next month before making an announcement on the location. The officials have been maintaining a complete silence over these developments as the government, which made unsuccessful attempts at bringing a car plant to Andhra Pradesh in the past under different chief ministers, is wary of any kind of publicity in this regard.
Though the final choice of the company regarding the location is still anybody's guess, the officials, however, sound optimistic following the change in government in Tamil Nadu. “The defeat of the DMK may turn out to be an advantage to Andhra because it will take sometime for the new government to settle down, giving AP an edge in the bargain,” a senior government official said.
The previous DMK government had offered land to the company at Vallam town near the Nokia plant.
The company is looking at setting up a 2-million unit capacity project with an investment of about $1 billion, according to the sources in the know.