India's largest car manufacturer Maruti Suzuki India (MSI) has said it is looking at setting up a manufacturing unit in Gujarat, where it has sought 500 acres of land.
The company's managing director Shinzo Nakanishi and chairman RC Bhargava on Tuesday met chief minister Narendra Modi with a proposal to set up a plant in a 500-acre plot with capacity to produce a million cars per annum.
The company officials have shortlisted three states: Gujarat, Maharashtra and Andhra Pradesh for its expansion plans outside the state of Haryana, where it has six manufacturing units at two locations.
While the plant in Manesar can produce 3.5 lakh units annually, Maruti's three units in Gurgaon have a combined annual capacity of 8.5 lakh units.
The location for the proposed factory will be selected in three months, said Bhargava after meeting with the CM and top bureaucrats of the state. "We are in the process of exploring suitable location for the unit which will be operational in 3-4 years," he told reporters at CM's residence in Gandhinagar.
However, sources in the state secretariat said Sanand, which houses Tata's Nano factory, near Ahmedabad is likely to be the favoured destination of Maruti as well, since it is close to Ahmedabad.
The state government has offered land at three locations: Sanand, Dholera and Halol, where the General Motors plant is located.
Maruti is likely to make an investment of more than R6,000 crore in the first phase of the proposed project. "The first phase of production capacity would be one million cars, which would take around five years to install. At present cost, it would entail investment of Rs 6,000 crore," Bhargava said.
He added that the company would bring its vendors and parts suppliers to set up shop near its factory, which would bring additional investments into the state.
The main reason why the company seems to prefer Gujarat over other states is its coastline, as Maruti exports its cars from Mundra port in Kutch.
Having a manufacturing base in Gujarat can help cut logistics costs for export-oriented production, a state government official said.