European car-maker junks Andhra, prefers TN

HYDERABAD: The State government's attempt to kickstart automobile manufacturing in AP has once again failed with France-based PSA Peugeot Citroen choosing neighbouring Tamil Nadu for its Rs 4,000-crore facility on Wednesday.PSA has identified land at Sriperumbudur to set up a plant with an initial capacity of three lakh cars per year catering to the domestic and overseas markets. The plant will provide direct and indirect employment to over 20,000 people.Chennai already houses the who's who of the auto industry, including the BMW, Hyundai, Ford and Renault-Nissan.It was in December, 2010 that a team from PSA first met government officials seeking land. Subsequently, AP offered over 900 acres in two locations -- Sri City near Tirupati and Sitarampuram in Ranga Reddy district.When contacted, a senior government official said, "We have no communication from the company about finalisation of the location yet. There's a lot of interest from other automobile companies to set up operations here." This is the third time that AP's efforts to launch the automobile manufacturing industry have backfired. While German auto giant Volkswagen's AP proposal ran into a scam, former Hyundai official BVR Subbu's indigenous auto production project proposed in the State remained a non-starter.With an anchor client such as PSA, the State government hoped to develop an entire eco-system, including assembly production line, ancillaries units, dye manufacturing for car parts and body-building shops besides other related units.PSA is the second largest automaker in Europe and is ranked the sixth largest automobile manufacturer globally.In 2010, PSA reported a sales turnover of $67.30 billion. The car-maker had shelved plans to expand in India in association with Mitsubishi Motors early this year. PSA had exited from the country in 1997 through Premier Auto Limited after a lock-out at its Kalyan facility near Mumbai.