The Gujarat government has confiscated 200 acres of land, which was allotted to the French auto maker PSA Peugeot Citroen in Sanand. Reportedly, the move was taken after waiting for more than a year for payment. In total, the Gujarat government has allotted 584 acres of land to Peugeot Citroen.
Two state government officials said, “Since the company has failed to make even a single payment, we have sold around 200 acres reserved for Peugeot to other companies keen to buy land.” They further added that the land is divided into small pieces of 20-40 acres each and then sold individually.
Expressing their views on the remaining over 300 acres of land allotted to the auto maker, the officials of Gujarat government said that they may also sell the remaining portion if demand rises in future. Reportedly, in September 2011, Peugeot Citroen had agreed upon a state support agreement with the government and thus, was allotted land in Gujarat. The auto maker was planning to set up a manufacturing unit in the state with a production capacity of 165000 units a year. For this proposed plant, it also declared to employ a massive investment of Rs. 4000 crore.
A fact to note here is that the state government has just allotted the land to auto maker and not transferred, therefore, its sale is not anticipated to involve any legal terms. On this, the government official said, “After the Vibrant Gujarat Summit, demand for land is likely to rise. We can sell the remaining land if we find buyers admitting land deals had slowed in the area.”
Reportedly, an e-mailed query was sent to Peugeot Citroen, which did not witness any response. The officials of French auto maker neither confirmed nor declined their opinion on the matter of land. However, he said that the car company remained associated with the state government as it is counted among the sponsors for upcoming Vibrant Gujarat Summit.
It must be noted that Sanand and its adjoining areas are all prepared to transform into a major automotive hub at the time when auto industry is sluggish, which has forced several potential investors to wait and watch. The state government has planned three auto-component hubs at Sanand, Halol and Hansalpur.
As per India's Automotive Component Manufacturers Association (ACMA), the key auto component manufacturers have reviewed their investment budgets in Gujarat as purchasing land at high prices will be not wise at a time when the demand from Original Equipment Manufacturers (OEM) is significantly low. This can be clearly understood by the fact that the Tata Nano plant at Sanand is currently operational at close to 25 per cent less capacity utilisation, which has forced several manufacturers to reduce their manpower and production.
