Taking a cue from several global automobile majors that have set up their Indian manufacturing base near Chennai, French automobile and motorcycle manufacturer, PSA Peugeot Citroen (PSA) too has decided to establish its India hub near Chennai.

PSA, through its wholly-owned Indian subsidiary, will invest around Rs 4,000 crore in an integrated automobile manufacturing facility in Sriperumbudur near Chennai. The plant, which will have an initial capacity of 300,000 cars per annum, will cater to the needs of the domestic as well as overseas markets.

A high-level delegation from PSA, headed by Gregoire Olivier, CEO of Asian operations of PSA Peugeot Citroen China, met Tamil Nadu chief minister J Jayalalithaa at the state secretariat here on Wednesday to seek the state government’s support for the project. Senior officials from PSA as well as the state government were present at the meeting, a statement from the government said.

Headquartered in Paris, PSA is the second largest automobile manufacturer in Europe and sells its products under the brands Peugeot and Citroen. Ranked as the sixth largest automobile company in the world, PSA registered sales of $67.3 billion in 2010.

PSA, which had evaluated several sites in many states, has finally zeroed in on a site near Sriperumbudur, which has already emerged as a manufacturing hub for the automobile, electronic and telecom sectors. In addition, Chennai offers a mature ecosystem as an auto component supplier base with abundant availability of skilled manpower and established seaports, the statement said.

The PSA delegation requested the chief minister for a package of state support including land. On her part, Jayalalithaa assured the PSA officials of the state government’s support to enable expeditious implementation of the car project, which will generate direct employment for about 5,000 people and indirect employment for around 15,000 people.

In fact, it was under Jayalalithaa’s first tenure as chief minister that Tamil Nadu attracted the first global automobile major, when a delegation from Ford and Mahindra & Mahindra (then established as a joint venture) entered into an MoU with the state government more than 15 years ago, on January 3, 1996.

Since then several global automobile majors including Hyundai, Mitsubishi, Renault-Nissan and Daimler have established their car plants in Tamil Nadu. In addition, the state attracted wider investments through the setting up of numerous auto component units from countries like the US, Korea, Japan as well as Europe to supply parts to these car plants.