Maruti to Invest Rs 35,000 Crore in Gujarat Plant

New Delhi, Jan 10 (PTI) Maruti Suzuki India Chairman RC Bhargava on Wednesday said the company is in discussion with the Gujarat government to get the appropriate land parcel for its second plant to be set up at an investment of Rs 35,000 crore.

The country's largest carmaker plans to produce 10 lakh units annually at the new plant as it looks to ramp up annual production capacity to over 40 lakh units by 2030-31.

In an interaction with PTI, Bhargava said the auto major has inked an MoU with the Gujarat government for expanding business in the state.

"It is like most of these MoUs which are non-binding and subject to the approval of the board. So far, the company board has not considered anything in this regard," Bhargava said.

While noting that Gujarat is the preferred state for the new plant, he said the right set of land parcels is needed to set up the new facility.

"We, along with vendors, will make an investment of Rs 35,000 crore subject to the availability of the appropriate land because so far, we have not been able to locate and purchase the land required for expansion," Bhargava noted.

"You can't expand without getting the land. So, that is the situation right now," he added.

When asked if there are issues in getting the required land parcel in the state, Bhargava stated: "Getting land anywhere for anything is not a straightforward exercise".

"So, for now the search for land goes on."

The company is having discussions with the Gujarat government, but no plot of land has yet been finalised, Bhargava stated.

When asked if it would be feasible to meet the target of commencing production at the new site in FY2028-29, he stated: "It is feasible. There is still enough time for that."

Bhargava noted that the reason why Gujarat is the preferred state for having the new plant is that the automaker already has an established vendor base in the state.

"But the production volume today is only 7.5 lakh units. To get the best economies of scale, it is desirable that these people (vendors) should have the option of expanding production at the existing site (state) and going up to 20 lakh units," he added.

Also, the company has set a target of exporting 7.5-8 lakh units by 2030-31 and being close to Gujarat ports, the automaker has some advantage in terms of saving transport costs, he noted.

"So, that is why Gujarat is the preferred state, but then you need to get the right kind of land for that," the veteran industry leader stated.

Bhargava noted that both the company and state government are aware of the importance of the time.

"And both sides will make best efforts to close this matter hopefully as soon as possible," he added.

Terming Gujarat as a great destination to invest in, Bhargava noted that if the state was not good in terms of policies and business environment, then the company would not have undertaken so much expansion there till now.

When asked if the domestic car market would grow to a level which corresponds to the production expansion being undertaken by the company, he replied in the affirmative.

"Definitely. All indications today point that the economy will grow. Everything is pointing in the direction of growth," Bhargava said.

There can be unforeseen events, but the government has been taking a lot of steps to improve the ease of doing business, he added.

Speaking at the 10th Vibrant Gujarat Global Summit (VGGS) being held at Gandhinagar, Suzuki Motor Corporation President Toshihiro Suzuki earlier in the day announced that MSI will invest Rs 35,000 crore to set up a new plant in Gujarat.

As a result, the annual production capacity in Gujarat will be 2 million (20 lakh) units -- 10 lakh units at Suzuki Motor Gujarat and 10 lakh units at the second new plant, Suzuki said.

Suzuki Motor Corporation has around 58 per cent stake in MSI.

Currently, MSI has a cumulative production capacity of around 22 lakh units per annum across its two manufacturing plants in Haryana and Gujarat.

The two plants in Haryana -- Gurugram and Manesar -- together roll out around 15.5 lakh units per annum.

Suzuki Motor Gujarat, a unit of the company, has also set up a facility in Gujarat with an installed production capacity of 7.5 lakh units per year.

Besides, the car market leader is already in the process of setting up a new manufacturing plant at Sonipat in Haryana with an investment of Rs 11,000 crore in the first phase.

The new plant's first phase, with a manufacturing capacity of 2.5 lakh units per annum, is expected to be commissioned by next year.