Tata Motors Ltd will invest Rs 2,500 crore (Rs 25 billion) in a plant in Uttaranchal to make its fast-selling light commercial vehicle, Ace, and possibly its forthcoming Rs 1 lakh car. The plant will come up at Pantnagar and have a capacity to produce 350,000-400,000 vehicles a year.
Responding to a huge demand for the Ace, Tata recently announced that it would double the vehicle's production to 60,000 a year. The manufacturing location of the Rs 1 lakh (Rs 100,000) car has been a subject of much speculation.
"An agreement to this effect has already been signed and an initial deposit of Rs 7-8 crore (Rs 70-80 million) has been made by the company," said a Uttaranchal government official. According to him, the Ace is certain to roll out of the Pantnagar facility while the state has received only a verbal indication about the Rs 1 lakh car.
Tata Motors, according to this official, will take up 1,100 acres in Pantnagar, an industrial cluster where two-wheeler major Bajaj Auto plans to set up a motorcycle manufacturing unit.
A Tata Motors spokesperson refused to comment on the development, adding that the company was looking at several locations for its next plant. An official announcement on the new plant can be expected in May this year when the company announces its 2005-06 results.
The company, according to market sources, had also considered Himachal Pradesh and Punjab for setting up the new plant.
However, while Punjab does not offer any significant excise relief, the Himachal terrain is not considered conducive.
"The entire Rs 2,500 crore investment may not happen immediately. In order to avail of the excise relief this state offers, the first phase of the plant must be up and running by the end of March 2007," said state government sources.
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