Peugeot team in talks with AP government

HYDERABAD: If all goes well, PSA Peugeot Citroen, France’s biggest car producer, will set up shop in Sri City SEZ near Tirupati. The company is likely to invest about `2,000 crore during the first phase of its proposed assembly and manufacturing facility here.

“They have zeroed in on Sri City SEZ. But for the company to avail the tax benefits the State offers, they have to submit details of benefits the proposed plant will offer to the State,” a government official told Express.

Last month, a team from the French car major met senior government officials with a proposal to set up a greenfield project in AP. Subsequently, the State government offered land in two locations — Sri City near Tirupati and Sitarampuram in Ranga Reddy district.

On Tuesday, a team from Peugeot met Chief Minister N Kiran Kumar Reddy and officials from the Department of Industries & Commerce, Government of AP. According to sources, they have negotiated tax breaks and other incentives such as power from the State government.

“The plant is expected to produce cars and support ancillary units. The company will soon come up with information including employment generation both direct and indirect besides other benefits the State will gain,” he added. Peugeot officials weren’t immediately unavailable for a comment.

If Peugeot’s proposal fructifies in Sri City SEZ, located on the border of AP and Tamil Nadu, it is expected to give a fillip to automobile manufacturing in AP. The facility is likely to encompass a dye manufacturing facility for car components, an R&D team for design, body-building shop, new technologies for a central-controlled room for regular functioning besides a testing unit.

The car maker had shelved plans to expand in India which was planned in association with Mitsubishi Motors early last year. The company had exited from the country in 1997 through Premier Auto Limited after a lock-out at its Kalyan facility near Mumbai due to labour strike and subsequently financial crunch.