Volkswagen may locate plant in Vizag SEZ

THE German automotive major Volkswagen AG, which is in the process of identifying a place to locate a greenfield automobile plant in India, has zeroed in on the special economic zone (SEZ) coming up near Visakhapatnam city in Andhra Pradesh.

Following a recent visit by a high-powered delegation headed by the State Major Industry Minister, Mr K. Vidhyadher Rao, and the Finance Minister, Mr Y. Ramakrishnudu, and other senior Government functionaries, the automaker seems to have finally cleared the move to locate a plant in India.

The Volkswagen management is learnt to have agreed to the State's steadfast keenness to support and facilitate their entry to the Indian shores and to possibly make this an Asian hub. The company has manufacturing base in China but sees India as having a greater potential for growth.

A senior Minister in the State Government stated that the company has agreed to locate their facility in the Vizag SEZ and ``we have just initiated the process to expedite the process for completing of the SEZ which will also have an integrated port as a part of the larger project.'' To facilitate faster development and pave the wave for the entry of the car major, the Government on Monday cleared a Rs 672 crore support for the phase one of the SEZ.

One of the reasons the Government has decided against making this public is that the Volkswagen management is touchy about this announcement and the company would like to do so at an appropriate time. ``They are touchy and concerned and don't want the matter to come up in the press,'' a senior official told Business Line. In fact, last time, when the company top brass was on a visit to Hyderabad and had to go to Chennai to visit facilities in Tamil Nadu, they decided against when news reports appeared in the media. This was in a way blessing in disguise for AP, since we requested them to stay for one more day and visit alternative location in the proposed Vizag SEZ, the official said.

Based on this visit, the company is learnt to have expressed its satisfaction in the location. Not only did it like the overall environment but was also impressed with the port facilities to enable it to possible ship the components on one hand and also facilitate easy movement to other locations globally, the official said.

This is significant as the clusters theory would have meant a logical move to Tamil Nadu where Chennai has become a major automobile hub with Hyundai, Ford, Leyland, and others already housed there. This could have enabled swift vendor development for automotive components.