Andhra breaks jinx, looks to attract more auto majors
By Mohammed Shafeeq, Hyderabad, March 21 : Japanese auto giant Isuzu's agreement to set up a manufacturing plant has finally brought some cheer to Andhra Pradesh, desperately looking for carmakers for nearly two decades, most of whom have set up shop in neighbouring Tamil Nadu.
The state believes Isuzu's plant finally breaks the jinx haunting it ever since the Volkswagen scandal in 2005.
With Mahindra & Mahindra recently commissioning its tractor plant at Zaheerabad in Medak district and Isuzu signing an MoU to establish the unit in Nellore, the government hopes to build an eco-system to attract more automotive majors like its neighbouring states.
Mahindra & Mahindra commissioned Asia's biggest tractor plant with a capacity of 100,000 units a year.
This unit has come in the same town where the company took over loss-making Allwyn Nissan in 1989 and currently produces 70,000 various types of vehicles annually.
For the tractor plant, said to be the largest in Asia, M&M is setting up a suppliers park over 100 acres of land allotted by the government.
Industries Minister J. Geeta Reddy said M&M would also set up a four-wheeler unit in Medak.
She hopes Isuzu will also develop an ancillary park near their planned unit in Sri City, a special economic zone in Nellore district, about 55 km from Chennai.
Isuzu plans to invest Rs.1,500 crore in the plant to manufacture Sports Utility Vehicles (SUVs) and pick-up trucks, which it currently imports from its Thailand plant.
"We hope this will set the ball rolling for us. We have been chasing the cars, but that did not happen. This will really kickstart things for us," said Geeta Reddy.
The authorities are expecting that the Isuzu plant would help the state create an environment for growth like Tamil Nadu and Karnataka.
"One Toyota in Karnataka has attracted almost 150 smaller Japanese companies which supply components to Toyota. In Chennai there are more Japanese automakers like Nissan and Honda and there are about 250 supplier units," said Pradeep Chandra, Principal Secretary, Industries and Commerce Department.
He said the state was receiving inquiries from the Japan External Trade Organisation (JATO).
"By the time Isuzo goes into commercial production, we want to have some of the supplier companies. We want to capture the entire supply chain."
The industry has lauded the recent initiatives.
"Two auto industries coming up in the state is a very positive development. It will definitely bring ancillary industries and provide huge linkages with other industries," Devendra Surana, president of the Federation of Andhra Pradesh Chambers of Commerce and Industry, told IANS.
"Automobile is a forerunner of industrialization in any state. Though Andhra Pradesh is starting late, it is credible that the state is still getting it," he said.
In late 1990s, then chief minister N. Chandrababu Naidu's attempts to convince Malaysia's Proton to set up a unit in the state failed. Lord Swraj Paul's Caparo group also shelved the proposed bus unit in Nellore.
The state appeared to have captured the first big fish with Volkswagen's plant in 2005, but it later turned out to be a fraud by an executive of the German carmaker.
Helmuth Schuster and some others floated VW (Vashishta Wahan) to receive Rs.11.67 crore from the government.
Then Chief Minister Y.S. Rajasekhara Reddy refused to accept the money offered to return by Volkswagen and instead urged it to set up its plant in the satte.
The auto giant, however, opted for Maharashtra.
YSR's government in 2007 had a pact with M. Lokeswara Rao, managing director of MLR Motors, for Rs. 1,025-crore small car project. However, this project also never materialised and the government took back 225 acres of land allotted for the project in Medak district.
(Mohammed Shafeeq can be contacted at email@example.com)