Peugeot in Talks to Invest 1 Billion Euros in India

Leading automotive manufacturer PSA Group is currently holding discussions on plans to invest about one billion euros in India. This will definitely boost the country’s Prime Minister, Narendra Modi’s efforts to attract foreign investment to India as part of his Make in India initiative.

PSA, which makes Peugeot and Citroen cars, will be spending the amount on setting up a car factory and a factory for the manufacture of engines in southern India.

Modi’s flagship “Make in India” drive comprises measures like reducing red tapism, making land acquisition easier and tax breaks to encourage firms based overseas to set up factories to manufacture goods in India. Such measures have helped India to improve its ranking in the World Bank’s ease of doing business survey and get a credit rating upgrade from Moody’s Investors Services.

The PSA Group, which is based in Paris had made an entry into the Indian market in the late 1990s in partnership with Premier Automobiles when the Indian market was first opened up to foreign companies. The company however faced several roadblocks including lockouts by workers and shortage of kits and this led to huge losses. Peugeot withdrew from the Indian market in 1997.

Currently, in the Indian market, Maruti Suzuki, a joint venture of the Japanese auto manufacturer Suzuki Motor Group and Hyundai together account for 67 per cent of the Indian auto market.

According to a statement on the PSA Group’s website, Peugeot is planning to return to the Indian market through a partnership with the CK Birla group, who made the iconic Ambassador car. The plan is to set up a car factory in in Tamil Nadu by 2020 with an initial investment of 1 billion euros and make at least 100,000 vehicles on an annual basis.