Ahmedabad: French auto major PSA Peugeot Citroen (PPC) will get 600 acres for the proposed Rs 4,000 crore greenfield project in Gujarat "as and when they require it", a top official said in Ahmedabad on Friday.
"Six hundred acres of land was not transferred to Peugeot due to some financial issues for its proposed integrated manufacturing facility in Sanand and the company will now be given land as and when they require it," state's Principal Industry Secretary M Sahu told media.

Making its re-entry into India, PPC had signed a State Support Agreement (SSA) with the Gujarat government to set up an integrated manufacturing facility at an investment of Rs 4,000 crore at Sanand near here. It had also laid the foundation of the project in November last year.

The second largest European car manufacturer had proposed to roll out its first car from the Sanand plant -- the high- end C-segment model 508 -- in 2014 with establishment of a total production capacity of 1,70,000 cars in the first phase of the project.

The state government's decision comes in wake of reports that the French auto major is reviewing its global expansion policy in wake of slowdown in Europe.

"PPC plans for Gujarat has been put on hold. It is not only for Gujarat, but the company is reviewing its entire global expansion policy, in wake of slowdown in Europe," Sahu said.

"Taking into account the European market crisis which impacts significantly the Group's cash flows and profitability, PSA Peugeot Citroen announced its intention to reschedule its project in India, and construction operations on the production facility in Sanand during its financial results on February 15, 2012," a company statement said.

The statement said, however, the Indian market remains strategic for Peugeot Citroen, fitting well into the mid-term international development of the brand.

The timing of the introduction of Peugeot is being revised in line with the rescheduling of the project, it said.

The company had anticipated reaching full production capacity of 3,40,000 units by early 2016.

The Sanand plant was also proposed to have an engine manufacturing facility with a production capacity of 100,000 units annually.

As a consequence of its agreement with the state of Gujarat, Peugeot had switched its office from Mumbai, where they were set up during the early days of the project, to Ahmedabad, in Gujarat, a company spokesperson said.

PPC had proposed that the Sanand plant would focus on the Indian market, though its output could also be exported to right-hand drive car markets like ASEAN nations and Australia.

Earlier, the French carmaker was present in India through a joint venture with Premier Automobiles Ltd (PAL) nearly a decade ago. The joint venture was later wound up and the company, PAL Peugeot Ltd (PPL), stopped operations.


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