Italian conglomerate Fiat Spa will invest $1 billion in India in the next five years the largest investment planned by the group in any part of the globe during the period. A significant portion of the investment will be in the automobiles and related sectors, Paolo Cantarella, chief executive officer of the $50 billion Fiat Spa, said at a luncheon meeting hosted in New Delhi yesterday by the Confederation of the Indian Industry.
In an attempt to boost investment in the Indian component sector, Cantarella, who is on a six-day trip to the country, is meeting a team of 40 auto ancillary manufacturers from Italy in Mumbai today. The team is here under the aegis of Turin Unione Industriale to conduct joint venture negotiations with different local partners for supply to Fiats new manufacturing operations in India.
We are planning a substantial local content in all our ventures. So each investment project will be designed to increase the involvement of local suppliers who we are committed to developing into world-class suppliers. We feel that strong links between these local suppliers and their Italian counterparts will be vital, said the Fiat chief. We expect any production facility to be export-oriented and to operate in close synergy with Fiats world-wide industrial network. Fiat has identified India as one of its two manufacturing bases in Asia (the other being China, where negotiations are still on) for its global 178 Project to manufacture its world car: the Palio.
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The world-wide project, which consists of five distinct models of the Palio, will introduce in India the hatchback version in late 1999, and later the saloon and the pick-up versions.
Fiat Auto is setting up a car manufacturing unit in Maharashtra for the Palio in a joint venture with the Doshi family under a new company: Fiat India Auto Ltd. Once fully operational, the plant will manufacture about 100,000 cars in a year.
Two of Fiats group companies Magneti Marelli and Comau India are in the process of setting up manufacturing bases in Pune for car components and ultra-high-tech production systems. Another subsidiary, Teksid, has signed a memorandum of understanding with the Kalyani group for a joint venture company for manufacture of steel auto components.
In Uttar Pradesh, Fiat Engineering India is constructing a new factory for New Holland India for manufacture of three farm tractors designed by the Fiat design centre, set up in New Delhi last year.
Fiat also has a collaboration with truck-maker Ashok Leyland, controlled by the Hinduja group, for manufacture of 10,000 Iveco commercial vehicles in a year at a newly set up plant in Hosur, Karnataka.
Fiat has also decided to set up a training centre in India under its school, Isvor, for industrial training and will shortly sign agreements with Mumbai and Delhi polytechnics for training courses and scholarships in Brazil and Poland.
MNCs bring in investments which generate wealth and create jobs. But they also bring with them an even more important resource: knowledge and innovation. They bring managerial, organisational and marketing skills. Essentially, they bring the latest of industrial culture. I believe there is still insufficient recognition of that particular role of the multinationals here in India.