PSA Peugeot Citroen announced on Wednesday its plans to set up manufacturing and retail operations in India. This marks the entry of the tenth and the last major global automotive OEM (Original Equipment Manufacturer) in the world's second fastest growing auto market — a move which had been delayed by a few years due to the global financial crisis.

The French automotive group, which would be re-entering India after a break of around 10 years because of a failed joint venture, aims to start with production of a mid-sized car. Though it is yet to finalise the location for a new plant, the company said that it will be headquartered out of Mumbai and be led by Dr Rajesh Nellore as the Managing Director.

“Peugeot is pleased to announce its intention to enter the Indian market with both commercial and industrial operations. The brand will produce, as a first step, a mid-sized sedan car. The future production site's location is currently under evaluation,” said the company in a statement.

Reports have indicated that Peugeot is having detailed talks with State officials from both Andhra Pradesh and Tamil Nadu in order to get the best deal for a greenfield plant. The company is eyeing investments in the range of €1 billion (around Rs 6,000 crore) and is looking at a facility of around 1,000 acres in size, sources said. It is reportedly looking to introduce the 307 hatchback and the C5 sedan in the market.

While Peugeot is said to be looking at land at cheap prices, lower electricity rates and duty concessions, close proximity to a port for export purposes may also tilt the deal in favour of a certain location. Tamil Nadu, which also has many other OEMs like Nissan-Renault and Hyundai, has the Ennore port, while Andhra Pradesh has offered the Krishnapatnam port.

“India is a key market and this new implantation reflects our ambition to become a global player. As in China, we will offer Indian customers vehicles adapted to their expectations,” said Mr Grégoire Olivier, Member of the Managing Board and Executive Vice-President, Asia, in the statement.

It added that the Group has three strategic ambitions – to become more global, be a step ahead in services and products and reinforce its operational efficiency. Its objective is for its non-European sales to account for 50 per cent of total sales, compared with 39 per cent in 2010.

> roudra.b@thehindu.co.in

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