Hyderabad, March 15 (IANS) Japanese automotive major Isuzu Motors Friday announced setting up a manufacturing plant in India to make Light Commercial Vehicles (LCVs) and Sports Utility Vehicles (SUVs)
The plant, coming up in Nellore district of Andhra Pradesh with an investment of Rs.1,500 crore, will manufacture one lakh units a year.
Isuzu Motors India signed a Memorandum of Understanding (MoU) with the Andhra Pradesh government to set up the plant at Sri City in Nellore district.
Officials of Isuzu and the state government signed the MoU here in the presence of Chief Minister Kiran Kumar Reddy, Japan's Ambassador to India Takesai Yagi and Isuzu Motors Limited's executive vice president and general manager, sales, Ryozo Tsukioka.
An agreement was also signed between Isuzu Motor India and Sri City, a special economic zone.
Shigeru Wakabayashi, deputy managing director, Isuzu Motors India, later told reporters that the plant would manufacture pick-up truck (D-MAX) and SUV (MU-7) from late 2015 or early 2016.
The company unveiled on the occasion both D-MAX and MU-7, which it started selling this month by importing built up vehicles. It is currently selling it only in Andhra Pradesh and Tamil Nadu.
While Wakabayashi said they had not yet finalized the investment, the state government officials said as per the MoU, the company would invest Rs.1,500 crore in five to seven years, when the plant will reach peak production.
The state government has not allotted the land for the project but Isuzu purchased 4.30 lakh square meter land in the SEZ. Officials the only incentive offered by the state government is net Value Added Tax (VAT) incentive of 100 percent.
Wakabayashi did not agree that Isuzu had come late to India. "We don't see we are coming late. We are coming to India at right time," he said pointing out that Indian automobile industry is expected to see huge growth from 3.6 million last year to 10 to 15 million in 10 years.
He said the company expect sales of 80,000 units a year in India and export of another 40,000. "We will be producing cost-effective products in India," he said.
The plant in Andhra will also act as support foothold for Isuzu's main LCV operation in Thailand. The company manufactures three lakh LCVs and SUVs in Thailand every year.
The oldest Japanese automobile firm is scouting for a local partner to assemble its vehicles in India till its plant commences production. It is keen to start the assembly of its products as soon as possible to avoid rising import duties.
"We are studying several options. Hindustan Motors is one option but we have not finalized anything," Wakabayashi said when asked if the company is in talks with Hindustan Motors for the vehicle assembly.
The Japanese envoy said India account for seven percent of the global production of Japanese automotive companies. He hoped that India would overtake Thailand and China, which account for nine and 10 percent of their production respectively.
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