Amid the bitter dismay over having ‘lost' Peugeot to Gujarat, the Tamil Nadu Government believes it has learnt one useful lesson from the episode: be ready with a land bank.

“We gave everything, just everything, they wanted,” sighs one bureaucrat, recalling the “more than 35 site visits in the hot sun” to show Peugeot officials the pieces of land that the Government would acquire and offer the French car company. In the end, nearly two years of hard work has come to a naught, he despaired.

The project could have given direct and indirect employment to 10,000 people.

The Tamil Nadu Government believes it “could not have done more” to please Peugeot, a project which at one point it thought it had successfully wooed away from the neighbouring Andhra Pradesh. AP incidentally had done its utmost, even giving land free, to get Peugeot in.

In deference to Peugeot's demand, the Tamil Nadu Government even gave a “commitment letter” setting out in writing its promises with fulfilment timelines regarding making available land, power, water and so on.

Issue is land

Then, what went wrong? In one word: land.

Peugeot wanted the land to be handed over immediately, whereas the parcel of land the company liked had to be first acquired by the Government. A legal tangle caused some delay. The judgment was in the Government's favour, but the Government wanted to make sure there no interpretation issue would crop up later and was in the process of obtaining a legal opinion from the Attorney General on it. But in the meantime…..the bird flew away.

Lessons of Singur?

But why was Peugeot in such a hurry? A possible answer lies with the company's Chairman, Mr Philippe Varin. The gentleman used to be the CEO of Corus, the UK steel maker which is of the Tata group.

In that capacity he got to know Mr Ratan Tata well and was thus – TN officials rationalise – intimately knowledgeable about Tata Motor's vexing problems in Singur, West Bengal. Peugeot, in its second coming into India (the first was in a joint venture with Premier Automobiles in the mid-1990s), did not wish to take any chance.

Incidentally, Peugeot's plant will come up at Sanand, where Tata Motors produces the Nano cars.

“We have become victims of our own success,” a TN government official said, observing that with more and more investments pouring into the State, acquiring land had become tougher.

In informal chats, Tamil Nadu officials also rue the Government's inability to get investors go to the southern districts, which have several advantages. For instance, land is aplenty and cheap, the connectivity is splendid, given proximity to Tuticorin port and Madurai and Tiruvananthapuram airports.

(This article was published on September 2, 2011)
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