Tamil Nadu continues to lead in attracting large automotive projects. Oragadam, the emerging automotive and electronic manufacturing hub near Chennai, is all set to house the manufacturing unit of commercial vehicle joint venture between Germany-based Daimler AG and India's Hero Group. The manufacturing project will see an investment of over Rs 4,000 crore.
After evaluating a couple of locations, the partners have decided to set up the vehicle production unit of the JV at Oragadam and a memorandum of understanding to this effect is to be signed with the Tamil Nadu government during first week of July, a government official, on condition of anonymity, told Financial Chronicle. The commercial vehicle manufacturing facility will come up on 395-acre area at Oragadam. The new unit, which will provide job opportunities for over 2,000 people, will produce light and medium commercial vehicles in the initial phase and heavy duty vehicles later.
In April, Daimler and Hero Group announced their collaboration for the manufacture of commercial vehicles under 60:40 JV. They also announced that they were evaluating locations in Tamil Nadu, Maharashtra and Haryana for setting up the vehicle production unit. The Oragadam green-field manufacturing unit of Daimler-Hero JV will get special incentives and tax sops under the 'Ultra Mega Integrated Automobile Projects Policy' unveiled by the Tamil Nadu government in 2007 to attract large automotive investments into the state. The policy offers a slew of incentives for automobile projects involving investments of over Rs 4,000 crore.
Daimler-Hero manufacturing unit will be the third automotive project after Nissan-Renault and Hyundai in the state to avail special sops under the Ultra Mega policy. Tamil Nadu government's strong thrust on attracting large-scale investments in automotive and electronic manufacturing over the last two years has been paying rich dividends. Over the last two years, the Tamil Nadu government has signed 14 MoUs facilitating investments to the tune of Rs 18,483 crore, of which, automotive sector alone accounted for Rs 10,220 crore.
The state has set a target to attract investments to the tune of Rs 30,000 crore in this year (2008-09) alone and expects half of it to happen in the automotive sector.