Hansalpur (Gujarat): Japan's Suzuki group will invest up to Rs 8,500 crore in setting up a manufacturing facility here to supply cars to its Indian arm Maruti Suzuki India.
The foundation stone of the facility, which will have a total capacity of 7.5 lakh unit annually, was laid by the state Chief Minister Anandiben Patel here Wednesday. The first line of the plant will be operational by May 2017.
"There will be three assembly lines at the facility and the first one will start production by 2017. The investments will be done by Suzuki and it will be around Rs 8,000 crore to Rs 8,500 crore," Maruti Suzuki Chairman RC Bhargava told reporters here.
He said the first line will entail an investment of Rs 3,000 crore with a capacity of 2.5 lakh vehicles annually and will start rolling out vehicles from May 2017.
"The setting up of the second and third lines would depend on market conditions and Maruti's own success in gaining market share," Bhargava added.
According to company officials, the second and third lines would also have capacities of 2.5 lakh units annually, entailing investment of about Rs 2,500 crore each.
Maruti already has two plants in India - at Gurgaon and Manesar in Haryana - with a total annual capacity of 1.55 million units.
Bhargava said the plant here spread over 640 acres is expected to create a direct employment of 3,000 people and Maruti's vendors will also set up their facilities around the plant here to supply components.
SMC Chairman Osamu Suzuki said: "For the Suzuki group, setting up of this new manufacturing facility in Gujarat is the start of a new era. Under the 'Make in India' programme proposed by the Prime Minister Narendra Modi, we will set up a state-of-the-art production plant here in Gujarat, with high focus on productivity and efficiency."
Supporting the campaign to promote manufacturing in India, Bhargava said: "We have been doing it for the last 30 years and we are the original Make in India".
The plant here will supply exclusively to Maruti Suzuki, which had initially planned to set up the plant but later decided to let parent Suzuki Motor Corporation.
Last year, opposing the move, Maruti's institutional investors approached the Securities and Exchange Board of India, seeking its intervention to safeguard the interests of minority shareholders. Private sector mutual funds and insurance companies, which own almost 7 percent of the company, led the opposition.
Maruti expects to obtain minority shareholders' approval on its plans to let SMC own and invest in the upcoming plant in Gujarat in the next six months.
The company, which had delayed seeking the approval, is awaiting amendments to the Companies Act 2013 - already cleared by the Lok Sabha - to go through the Rajya Sabha during the upcoming Budget session of Parliament next month.
Bhargava also said that "there is no difficulty" in transfer of incentives and benefits provided by the state government to Suzuki, while the company is yet to decide on what car models would e produced at the plant.
Gujarat has become one of the favourite destinations for automobile companies.
Ford India is expected to start production by the first quarter of 2015 at its plant at Sanand where it has invested USD 1 billion to set up a facility that will have an installed capacity of 2.4 lakh vehicles and 2.7 lakh engines annually.