After Chakan and Aurangabad in Maharashtra, will German auto major Volkswagen's third India plant come up in a sleepy Kerala village? Though company officials have been shy of confirming the move, Kerala has emerged an unlikely contender along with frontrunner Gujarat for the Rs. 2,000-crore engine manufacturing plant that Volkswagen plans to set up soon.
"Three Volkswagen officials including an executive director and general manager met us and submitted an expression of interest to set up a plant in Kerala," V Somasundaram, additional chief secretary, Kerala said. "They said they would need three to five acres of land."
Volkswagen group spokesperson Alexander Skibbe was not available despite repeated attempts.
Kerala, struggling to shed its anti-industry image, highlighted the proposed Volkswagen project as part of the Rs. 26,000 crore investment commitment that the state has won during the just-concluded business summit. This triggered a controversy with local media reporting contradictory statements from Volkswagen.
"They discussed this plan with us. I don't know how a contradicting statement emerged," said Somasundaram.
Much as Kerala yearns for investment, its chances of attracting automotive manufacturers appear grim due to the lack of a vendor base and the high cost of labour.
Tyre factories of MRF and Apollo are the only noteworthy investments in Kerala in auto and auto ancillary segments as the state tops in the production of rubber, their key ingredient.
It is possible that Volkwagen just scouted Kerala as a possible destination. Gujarat and Tamil Nadu have been the big gainers as and when auto majors have looked beyond Maharashtra following changes in its tax policies.