Companies

Peugeot gets the red-carpet treatment in India

| Updated on: Jul 02, 2011

TN, Gujarat, AP strain every nerve to woo French carmaker

For a company whose first innings in India was little to write home about, PSA Peugeot Citroen is sure getting the red-carpet treatment this time around.

Tamil Nadu and Gujarat are pulling out all stops to woo the French carmaker, while Andhra Pradesh still continues to be in the reckoning. On Wednesday, the Tamil Nadu Government issued a release which suggested that Peugeot had finalised a site near Chennai. The company was quick to deny any such possibility and, its representatives met the top brass in the Gujarat Government the next day.

Contrary to common perception, it now looks as if Andhra Pradesh (the original location) is still in the running. Why are all these States bending over backwards for this investment and even jumping the gun before any decision is reached?

The last?

For one thing, this could be among the last big-ticket automobile investments in India, which means more business to ancillary suppliers, more jobs and political mileage. It will be a big deal to Gujarat which bagged the Tata Nano project three years ago and is now wooing Maruti and Ford. Peugeot would be the icing on the cake.

As for Tamil Nadu, it already has in its kitty some of the biggest names in the business right from Ford and Hyundai to Renault-Nissan and BMW. It is already being proclaimed as the Detroit of South Asia and would like to justify this tag by getting yet another big name in the business to set up shop here.

Andhra Pradesh tried its best years ago to get Malaysia's Proton, but this project did not take off. Volkswagen was the other potential candidate, but a financial scam scuttled plans and the company eventually settled for Maharashtra. Peugeot is the last bet for AP, and it will naturally offer the best fiscal incentives to make this a reality.

It is only logical for carmakers to scout for a host of sites before opting for the most ideal location. When India threw its gates open to multinational investments in the auto industry, it was widely believed that Maharashtra would lead the pack. However, Tamil Nadu emerged tops while Karnataka got a fair share in the form of Volvo and Toyota. Honda and, Daewoo earlier, opted for Uttar Pradesh. It took Maharashtra years to figure out what went wrong, and once it had put its house in order, Chakan, Ranjangaon and Talegaon emerged one of the key auto hubs in India.

Second run

Peugeot had, incidentally, set up shop first in Maharashtra way back in 1994-95. The Kalyan plant was bogged down with labour problems and production schedules went haywire. The company found itself facing a huge shortage of completely knocked down kits, and its tale of woes finally culminated in a legal dispute with the local partner, Premier Automobiles.

After weathering this storm, Peugeot was getting set to start operations from scratch when its French parent decided that enough was enough. The Kalyan plant downed its shutters in late 1997, and this abrupt exit left a bitter taste among the company's dealers, vendors, financiers and employees.

There was no question that Peugeot's brand image took quite a beating in the process. Time, though, is a big healer, and it is clear that the saga has long been forgotten, especially with the kind of reception that the company has been getting across India.

Published on March 12, 2018

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