Peugeot Citroen to put India plans on back burner

French carmaker PSA Peugeot CitroŽn said today it might adjust its schedule for building a car-manufacturing factory in India.

"PSA Peugeot CitroŽn is currently evaluating the scheduling of its project in India, which may lead to some adjustments to the schedule as it currently stands," the company said in a statement. "India is a key strategic market for the Group," it added.

The company didn't elaborate on the possible adjustments.

Peugeot, one of Europe's biggest auto manufacturers, had publicly announced that it would locate a new plant in Sanand, Gujarat, at a cost of Rs4,500 crore, to produce 170,000 vehicles per year. The first locally produced Peugeot car from the plant was scheduled to roll off the assembly line in 2014.

However, these plans now seem to have been put on hold.

The company has, meanwhile, started the process of shutting down its Mumbai office and shifting it to Ahmedabad in Gujarat following an agreement with the state government last year over land for the proposed Sanad plant. The Mumbai office has a staff of about 14 people.

"The group is currently evaluating the scheduling of the project, which may lead to some adjustments to the schedule as it currently stands," said Jonathan Goodman, director relations presse, PSA Peugeot Citroen.

According to a report, Peugeot is working out strategies for frugal spending on the India project. "The company is re-engineering the project so that every penny put into the project brings value," The Economic Times quoted a consultant associated with the project as saying.

PSA Peugeot Citroen's revision of its India plans could prove a setback to Gujarat Chief Minister Narendra Modi's ambition of making Sanand India's newest auto manufacturing hub. Tata Motors and Ford Motor Co have already started setting up their projects there.

Peugeot, in April 2011, revamped its top management, appointing M Frederic Fabre as the new head of India operations. He replaced Rajesh Nellore, who earlier had the mandate to spearhead Peugeot's re-entry into one of the world's fastest-growing automobile markets.