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PSA Peugeot Citroen has been offered land for a greenfield factory at a price as low as Re 1 an acre by the Andhra Pradesh Government at Tada in Nellore district.
“The indication is that a decision will be taken very soon by the company, probably in the next two months,” sources close to the development told Business Line .
The company, which made an official announcement about its India plans this month, is reported to be evaluating Andhra Pradesh and neighbouring Tamil Nadu for its plant. While Andhra Pradesh is offering cheap land of around 1,000 acres and other infrastructure benefits in order to get the €1 billion (about Rs 6,000 crore) Peugeot investment, Tamil Nadu has the advantage of having ports that deal with auto exports (at Ennore and Chennai) and an existing large automotive hub with a component supplier base.
However, industry experts said that the cheap cost of land could sway the French automaker's decision in Andhra Pradesh's favour, because in Tamil Nadu, land may be valued at a few lakh of rupees per acre. Tamil Nadu has also had problems of labour unrest and shortage of electricity.
“The land offered in Andhra Pradesh at Tada is next to the Tamil Nadu border and close to the Sri City SEZ in Chittoor District. This means that the company could still benefit from using the Ennore port, even if it is based out of Andhra Pradesh and be assured of good roads and power distribution. For Andhra Pradesh, which has almost no automotive investments currently, Peugeot setting up base is very important,” said an auto industry official.
When contacted, an Andhra Pradesh Government official did not confirm or deny the specifics of the deal being offered to Peugeot, but said that certain benefits have been provided. “They had asked for several incentives and we have given them what was possible,” said the official.
Andhra Pradesh has reportedly offered similar land prices for other big industrial investments in the past in the interest of attracting large companies, which could also bring in employment to the State. However, this has slowed down in the recent past as land values have sharply risen.
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