Two of India’s biggest industrial states are in a battle to attract Peugeot-Citroën to build a $1 billion car factory, with an initial capacity to produce 300,000 cars a year.
Officials from the French carmaker, including the director Grégoire Olivier, visited the Indian states of Tamil Nadu and Gujarat last week for discussions about the project, which is expected to create up to 20,000 jobs.
The 1,000-acre factory is likely to generate a further $1 billion investment from suppliers that are expected to locate nearby.
Peugeot was forced to issue a clarification after the state government of Tamil Nadu independently issued a press release claiming that the French company had already chosen a site for its factory at Sriperumbudur, near Chennai, formerly known as Madras.
Peugeot, Europe’s second-largest carmaker, said that the decision “is not taken at this stage” and that it was still considering its options.
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Tamil Nadu and Gujarat are vyeing to become the car manufacturing centre of India, which is set to become the world’s third largest car market by 2020, after China and the United States.
Peugeot-Citroën is the only global carmaker to not yet have a presence in India. The company was forced to leave the Indian market in the late 1990s following a drawn-out legal dispute with its Indian partner, Premier Automobiles. The rapid growth in India’s car market, though, has become impossible to ignore.
Last year, Indians bought more than 2.7 million light vehicles, compared with 700,000 ten years ago.
As a result, many carmakers are moving their operations to the country or are designing cars specifically aimed at the Indian market, such as Tata’s Nano.
Nearly 80 per cent of all new cars sold in India last year were classified as either minicars or subcompacts.