Gujarat CM Narendra Modi is leaving for Japan on Sunday to convince Suzuki Motor Corporation leadership to substantially scale production at its Gujarat plant from the existing 250,000 cars every year, as the company is regularly facing law and order and labour problems at its plant in Manesar, Haryana.
Maruti is in the final stages of talks with the state government to set up a manufacturing plant in Gujarat, similar to those in Gurgaon and Manesar. Maruti produces 1.2 million units across Gurgaon and Manesar. It is currently facing its fourth labour unrest since June last year. In the recent clashes between the workers and the management, the general manager (human resources), Awanish Kumar Dev, was killed while more than 100 were injured.
During his five-day stay in Japan, Modi has decided to spend almost all of July 25 in Hamamatsu, Japan, to meet Shinzo Nakanishi, managing director of Maruti Suzuki and will then have lunch hosted by Osamu Suzuki, chairman of Suzuki Motor Corporation. Modi will board a bullet train to Hamamatsu from Tokyo on the morning of July 25 and is planning to spend an hour at the Suzuki museum later in the day.
Maruti Suzuki has decided to invest Rs 4,000 crore in the first phase of the project and the same amount would be invested by its vendors.
According to the original plan of the company, the automobile giant wants to set up a plant in Gujarat and produce 250,000 cars annually, but the state government is inclined to convince the company they produce more cars because of the recurring law and order problems the company is facing in Haryana. “The fact that Narendra Modi is travelling to Japan for five days just before the elections in the state shows the importance he is giving to this project. It is very essential for him to bring Maruti Suzuki to Gujarat before the elections, as it will boost his image as a man for development,” said a senior official of the Gujarat government.
The Gujarat administration is hopeful the minister will be able to convince Maruti Suzuki to expand its production plans in Gujarat and ensure the automobile company it would not face law and order problems in the western state.
Gujarat has identified precision engineering, automobile and auto component as one of the six sub-sectors with the potential of high value addition. It has been constantly developing and upgrading infrastructure to support the industry, especially in the regions of Sanand, for Tata Nano’s plant near Ahmedabad and Halol for General Motors’ (GM) near Baroda.
“The Tata Nano project in Sanand was the biggest breakthrough for the state in the auto sector and the chief minister believes that the project of Maruti-Suzuki will be the second big breakthrough for the government. We have attracted three large-scale investments in the form of Ford, Peugeot and Maruti in the past two years,” said the official.
In a similar move, the Modi administration had recently taken a delegation from the Automotive Component Manufacturers Association of India (ACMA) to the Sanand facility to show “probable pieces of land” that could be allotted for the development of the suppliers’ park.
The state government is willing to immediately allocate ACMA, in phases, a 400-acre land at Sanand, adjacent to Tata and Ford sites and 150 acres at Halol, adjacent to GM and Hero MotoCorp sites. In the next phase of the plan, Modi is willing to allocate another 400 acres of land after December 2012 to ACMA, adjacent to Maruti Suzuki’s in Becharaji.
“We expect the ancillary industry invests two-three times of the investment made by an original equipment maker and this would mean a huge amount of investment in the state,” added the official.