French carmaker Peugeot SA Group and South Korean conglomerate Lotte Group are in talks to collectively invest about $6 billion (approximately Rs 38,775 crore) in India, according to a Bloomberg report. The move is expected to boost Prime Minister Narendra Modi’s Make in India initiative to attract foreign capital in the country. PSA Group plans to spend about $1.2 billion to build a car factory and an engine plant in southern India, the report added. Lotte may invest between $3 billion and $5 billion in the next five years. A Paris-based spokesman for PSA referred to a statement in January on the cooperation with C.K. Birla Group in India, which included an initial investment of 100 million euros. The Indian government is discussing more than 550 foreign investment proposals worth about $85 billion. The proposed projects include setting up factories in the areas of food processing, electric vehicle components and electronics among others.
Modi’s flagship “Make in India” plan encourages foreign firms to manufacture locally by offering easier land acquisition, pruning the number of approvals and, in some cases, offering incentives. The efforts have helped India move up in the World Bank’s ease of doing business survey and achieve an unexpected credit rating upgrade last week by Moody’s Investors Services.
Previously, Hindustan Motors sold the Ambassador brand to Peugeot SA in February this year for Rs 80 crore. The PSA Group is expected to make a comeback to India by 2020. PSA, maker of Peugeot, Citroen and DS cars, said it will build cars in Tamil Nadu under an initial 100 million-euro ($107 million) joint venture investment with Birla-owned HMFCL, with an annual production capacity of 100,000 vehicles.
