GM to invest $300 mn in 2nd India Plant

General Motors Corp., has finally decided to set up a new vehicle manufacturing facility in Talegaon, near Pune, in Maharashtra.

The world’s largest car manufacturer, GM will invest more than $ 300 million (Rs. 1,250 crore) to set up a greenfield car manufacturing facility, which will have an initial production capacity of 140,000 vehicles annually with the capability for significant expansion and will employ close to 1,000 people.

GM, which already has 60,000-unit facility at Halol near Vadodara, Gujarat, had been on the search for a location for its new unit and visited close to 20 locations across various states for its greenfield project before deciding for Talegaon. The carmaker assembles the Chevrolet Tavera, the Optra, the Optra Hatchback and the Aveo at Halol unit.

In the beginning, the US-based GM will manufacture a mini-car at the Talegaon facility for the local market, which will take on Suzuki and Hyundai.

The official agreement was signed on Thursday by General Motors India President and Managing Director Rajeev Chaba and Maharashtra secretary (Industries) V. K. Jairath in the presence of Maharashtra Chief Minister Vilasrao Deshmukh and GM Asia pacific president Nick Reilly.

Addressing on the occasion, Mr. Deshmukh said, “The presence of GM reaffirms Maharashtra as a leading investment destination. It will encourage other multinational and Indian companies to consider Maharashtra for their ventures,” adding that "The State will extend its full support to GM's new plant to ensure that it becomes a success.''

As the state committed to provide infrastructural support to GM’s venture, it has already announced setting up of a 1,000 MW power plant near Talegaon.

The land for the manufacturing unit has been leased for 95 years by the Maharashtra Industrial Development Corporation (MIDC). While construction of the 300 acre-facility will start at the end of this month, it is expected to be ready within 20 months. Company officials said commercial production is likely to commence from the third quarter of 2008. The latest move will take GM's investments in India to more than $ 750 million.

After informing about the future launch of new Chevrolet products this year and next year, Nick Reilly, President, GM, Asia Pacific, said, “For now, we will be launching all our products under the Chevrolet brand and will look to bringing in our other products at a later stage. We will start with small cars at the Talegaon facility but will introduce the small car from our Halol facility in the second quarter of 2007 itself.”

GM sold a net of 30,837 cars in previous year and, according to Rajeev Chaba, the company is targeting sales of 45,000 cars this year and 75,000 cars next year. “We have a vision of achieving a 10 per cent share of the Indian market by 2010,” he said.

GM officials said the new facility will create 20 additional indirect jobs for every one of its 1,000 employees thus contributing to the overall development of the state.