PSA Peugeot Citroen announces India foray

PSA Peugeot Citroen, one of the leading carmakers in Europe, has finally announced its intention to enter the Indian market with both commercial and industrial operations. The brand will produce, as a first step, a mid-sized sedan car. The future production site's location is currently under evaluation. It was earlier reported by Motown (in its February 2011 issue) that the company is actively looking at restarting its operations in India and is scouting for a land to set up its manufacturing facility plant in Andhra Pradesh (AP). It is widely believed that the French carmaker may spend about 3,000-3,500 crore in phases to set up its green field operations in India on a greenfield facility with an annual production capacity of 100,000 cars. Speculation is also pretty rife that the Paris-headquartered company has chosen the Sri City Special Economic Zone near Tirupati in Andhra Pradesh for its assembly and manufacturing facility. The carmaking giant already had discussions with the Automotive Research Association of India (ARAI) to understand the regulations and homologation needs for its products. Currently, top honchos from the Euronext-listed company are believed to be lobbying with the AP government to seek tax breaks, soft loans, and other incentives such as power backup. Dr Rajesh Nellore, Managing Director India, is leading from Mumbai the Group’s activities in India. “India is a key market and this new implantation reflects our ambition to become a global player. As in China, we will offer Indian customers vehicles adapted to their expectations” said Grégoire Olivier, Member of the Managing Board and Executive Vice-President of the Asia area. The Group has three strategic ambitions: become more global, be a step ahead in services and products and reinforce its operational efficiency. Its objective is to reach a share of 50 pc of its sales outside Europe by 2015, compared to 39 pc in 2010. According to well-informed sources, Citroen was expected to be making an entry into the Indian market with their small car models, especially the diesel ones. Once it establishes its unit, its global vendors are also expected to come up in the premises of the car plant. Furthermore, if its proposal is approved by the company, the manufacturing facility is likely to have a dye manufacturing facility for car components, an R&D centre, an assembly line for powertrains, a body-building shop, a paint shop, new technologies for a centrally-controlled room for regular functioning, and also a testing unit.” It may be recalled that Peugeot's first foray into India was through a joint venture with Premier Automobiles Limited in 1994 to assemble models such as the 309 for the Indian market. The agreement was scrapped three years later after poor showing of its 309 and worker agitations at its factory in Maharashtra leading to a factory lockout. Following Peugeot’s exit from India, there has been a lot of speculation about its re-entry.