French carmaker PSA Peugeot-Citroen said on Thursday that it plans to invest about €650 million (Rs4,000 crore) to build a manufacturing facility at Sanand, the rapidly developing automotive cluster in Gujarat, where Tata Motors has its 'Nano' unit and Ford Motor Co is setting up a plant.
The move is in line with Peugeot-Citroen's goal of reducing its dependence on the mature markets of Europe. The company has said earlier it is aiming to have half of its vehicle sales outside Europe by 2015, compared to 38 per cent at present, by ramping up production capacity in China, Russia, Latin America, and now India.
"Today, a new lion is born in Gujarat," said Pillippe Varin, chairman of Peugeot Citroen Automobiles, referring to the company's logo at a ceremony in Gandhinangar to sign an agreement with the state government.
The Gujarat Industrial Development Corporation (GIDC) has set aside 584 acres of land in Sanand for Peugeot. It has also set aside another 25 acres for ancillary industries to support the unit.
Varin said the company preferred Sanand over Tamil Nadu because Gujarat offers a proactive business-friendly environment, excellent infrastructure and is geographically well-positioned to cater for passenger car markets across India.
To be operational by 2014, the new complex will comprise a vehicle assembly plant with a paint shop. It will have an initial capacity of 165,000 vehicles annually, which it proposes to expand to to 340,000 vehicles, 300,000 engines and 300,000 gear boxes by 2020.