French firm to invest Rs 700 cr in Tamil Nadu car plant

“The investment announcement by French PSA group is a positive development given the fact that Chennai is the automotive hub,” Ramesh Kymal, Chairman, Confederation of Indian Industry (CII) Tamil Nadu State Council, said. “The major thing that has happened in the recent years is that the power cut in the state is almost nil, which is a big attraction for industries planning to locate their plant in the state,” Kymal said. 

“The investment announcement by PSA is a major development after uncertainty that was present during the last couple of years. A global automotive major putting up a new plant in TN will be a major push for the state to attract more investments,” an industrialist not wanting to be quoted said. This is a major automotive sectoral investment that Tamil Nadu has got after Chief Minister O Panneerselvam has took office.

Industrialists point out that Panneerselvam’s good equation with the central government is also another positive sign that gives comfort for the investors. 

However, Opposition parties in the state have been complaining about Tamil Nadu losing out to other states on the industrial investment front. PSA, partnering with India’s CK Birla group, announced its decision to invest around 100 million euros (Rs 700 cr) in setting up a 100,000 units per annum car plant near here. 

The partnership between PSA and CK Birla group involves two joint ventures. “As part of the first agreement, the PSA Group will hold a majority stake in the joint venture company being set up with HMFCL for the assembly and distribution of PSA passenger cars in India,” a PSA statement said on Wednesday in France. 

“As per the second agreement, a 50:50 joint-venture is being set up between the PSA Group and AVTEC Ltd for manufacture and supply of powertrains. The manufacturing sites for both vehicle assembly and powertrains will be based in the state of Tamil Nadu,” the statement added. According to PSA, the Indian project is in line with its strategic plan ‘Push to Pass’ and the growth plan of CK Birla group.

The manufacturing capacity for powertrains will cater to the domestic market needs and global vehicle makers. The performance of the industrial set-up will be supported by a significant level of localisation, in order to reach the necessary cost competitiveness.