Revving up India’s auto Industry

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Apr. 1 – Two of India's heavy weight auto makers seperately announced on Monday that they would be pumping in Rs 75 billion (US$1.9 billion) into India's already booming auto sector.

While Ratan Tata controlled Tata Motors pledged to invest Rs 60 billion (US$1.5 billion) into ramping up their existing manufactuing unit and building a vehicle testing facility over 4-5 years at Chakan, near Mumbai, Mahindra & Mahindra promised the Maharashtra government they would invest Rs 15 billion (US$375 million) in addition to to the Rs 25 billion (US$625 million) that they have already earmarked to make commercial vehicles at a greenfield site at Chakan. The total sum of Rs. 40 billion (US$1 billion) will be utilized towards the development and production of all vehicles slated to be rolled out from the proposed Greenfield.

The investment by Tata Motors is the single largest investment by the automobile sector in the state.

This investment is over and above the $1 billion that Tata Motors will jointly put in with its partner Fiat at the latter’s plant in Ranjangaon. Ravi Kant, MD, Tata Motors said that this capital expenditure will help to increase capacity in its Pune plant by about 40% to over 600,000 units a yearand would generate additional direct employment for 1,500 people at full capacity.

M&M, which earlier this year pulled out of a planned venture with Renault and Nissan Motor, will start operations at Chakan, near Pune, in two years to make 300,000 medium and heavy commercial vehicles.

The plant, which will make trucks for Mahindra’s joint venture with Navistar’s International Truck & Engine unit, will also have a powertrain facility, Pawan Goenka, head of M&M’s automotive unit, said. M&M aims to double domestic sales and quadruple exports by 2010.