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N. Ramakrishnan

CHENNAI, Feb. 17

AS the German car manufacturer, Volkswagen, scouts for a suitable site to put up a plant in the country, the Tamil Nadu Government is seriously wooing the German company to the State.

A team from Volkswagen is expected to visit the city shortly and hold discussions with the officials and take a look at possible locations, according to reliable sources.

According to the sources, the Government has identified at least three places, all within a 60 km radius from here, where land is available for the German company to put up its plant. The locations are at the Sriperumbudur industrial park and the Oragadam industrial park, near Sriperumbudur, both belonging to the State Industries Promotion Corporation of Tamil Nadu, and the Mahindra Industrial Park, near Maraimalai Nagar.

The Government is hoping that the presence of car manufacturers like Ford India, Hyundai Motor India, and Hindustan Motors, which assembles the Mitsubishi Lancer at its Tiruvallur plant, not to mention the commercial vehicles manufacturer, Ashok Leyland, and the strong base the State has in the auto components sector will help swing Volkswagen's decision in its favour.

While wooing Ford and Hyundai to set up plants in the State, the then Government could entice them with sales tax concessions that were being offered by all States competing for foreign investment, this time around the Government will have to hard-sell the ready availability of developed land and the relatively good infrastructure it enjoys to woo the German car manufacturer, according to the sources.

With the States doing away with the practice of giving sales tax-based fiscal incentives, the Government may offer the developed plots at subsidised prices. Besides, it is also expected to provide roads, water supply and sewerage connections, and ensure rail linkage from the plant to the nearest railway station to attract Volkswagen, according to the sources. Though tax-based incentives are no longer available, the Government can offer capital subsidy depending upon the level of investment being planned.

The three places that the Government plans to offer to Volkswagen are within 90 minutes driving distance from the city, while the airport is only an hour from these places. Besides, the Government is hoping that the easy access to a national highway from any of these three locations and the presence of an international port in close proximity will work in the States's favour.

More importantly, the Government is banking on the industry, especially global companies like Ford and Hyundai, to put in a good word about the infrastructure available in the State and the industry-friendly official machinery to ensure that it snares Volkswagen also.

It may be recalled that it was the Jayalalithaa Government during 1991-96 that signed an agreement with Ford India to set up its plant at Maraimalai Nagar. The Government had almost finalised a similar agreement with Hyundai but the MoU could not be inked as elections were announced and the model code of conduct came into force.

It must be mentioned that Volkswagen is present in India through its fully-owned subsidiary, Skoda Auto India Ltd, which assembles the Skoda Octavia at its plant in Aurangabad, Maharashtra. Volkswagen has, at different times, been reportedly interested in introducing its own brand of cars in India.

It has also said it is keen to launch its commercial vehicles, initially imported as completely built units and later assembled locally.

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