Haryana goes all out to keep Maruti Suzuki invested3 min read . Updated: 18 Dec 2018, 08:06 PM IST
Haryana has offered Maruti Suzuki at least seven locations, including Rohtak, Karnal, Faridabad and Dharuhera, to choose from for a new car plant
Mumbai/New Delhi: The Haryana government has offered Maruti Suzuki India Ltd at least seven locations to choose from for a new car plant being planned by the country’s largest carmaker. The local unit of Suzuki Motor Corp. wants to shift out of its oldest factory in the country, in Delhi’s bustling suburb of Gurgaon, amid traffic congestion and complaints from residents and civic bodies. The Haryana government has offered new sites in Rohtak, Karnal, Faridabad and Dharuhera, among others, to Maruti, said two people with direct knowledge of the matter.
The alternative locations were offered after Maruti Suzuki rejected a 1,300 acre site in Sohna, around 40km from Gurgaon, after its engineers found the site was not conducive to construct a car factory.
The engineers found “excessive amount of sulphur and salt" in the soil, which was not suitable to build a heavy industry facility, the first person said on condition of anonymity. “Most notably, the area was found to be low-lying, with very high levels of groundwater. Water would come out in about half a metre of digging," added the person.
A spokesman for Maruti Suzuki declined to comment.
If Maruti Suzuki decides to build its new car plant in Haryana, it is estimated to require an additional investment of about ₹ 12,000 crore. These would include the cost of procuring land and building four assembly lines capable of producing one million cars a year.
“The India market is expected to grow at a CAGR (compound annual growth rate) of more than 7%, so it is inevitable for Suzuki to keep their investment plans going on in India," said Puneet Gupta, associate director, vehicle forecasting, IHS Markit Ltd. “This will also encourage their suppliers and associated partners to plan their own investments. With so much of disruptions happening (in the car industry), all the suppliers are sceptical about new investments and are just waiting and watching."
Since it opened the factory at Gurgaon in the early 1980s, Maruti Suzuki has constructed a second plant in Haryana, at Manesar, and its third factory in the country, in Gujarat.
The automaker is seeking 800-1,000 acres, preferably close to its Gurgaon factory, to reduce likely resistance from its workers on relocation. It told the Haryana government that the site should be well-connected by roads and railways and should not be in low-lying areas, the second person said.
Maruti Suzuki is likely to build residential quarters, hospitals, schools and other amenities for its employees in and around the facility.
The current manufacturing facility of the company in Gurgaon is on a 300 acre plot. The land offered in Sohna was close to the Western Peripheral Expressway—also known as the Kundli-Manesar-Palwal Expressway—40km from Maruti Suzuki’s second factory in Manesar. Haryana government stopped the public bidding for the 1,300 acres near Sohna once Maruti Suzuki showed interest.
Gurgaon and Manesar are prime manufacturing zones for Maruti Suzuki. The firm built its vendor ecosystem around Gurgaon, expanding it to Manesar in 2008.
Present-day Gurgaon largely came up around the Maruti Suzuki factory. But as Gurgaon transformed in the decades that followed, with the entry of multinational companies, the company began to receive complaints from civic bodies and residents, who said its presence in the heart of the city led to traffic congestion due to heavy trucks that deliver parts to the plant and transport fully-built cars out.
In 2012, Maruti Suzuki decided on a phase-wise dismantling of the Gurgaon plant. Mint was the first to report this in March 2012. Maruti Suzuki has significantly reduced production at this plant from its original capacity of 700,000 vehicles a year.