Isuzu may set up LCV unit in Andhra

Likely to sign an MoU with state government on March 15

Japanese truck-maker Isuzu Motors is likely to sign an MoU with the Andhra Pradesh government for setting up a manufacturing facility at the Sri City industrial park bordering Tamil Nadu.

Sources in the government as well as those close to the company confirmed the development stating that the Isuzu management had sought time from chief minister N Kiran Kumar Reddy on March 15 for the signing of the MoU.

It would manufacture pick-up trucks (light commercial vehicles) at the proposed facility by bringing in about Rs 1,500 crore investment within two-and-a-half years, a senior industry department official told Business Standard on Wednesday.

The company is entering the Indian LCV market this month by launching two pick-up trucks in the 2-3.5-tonne segment. It would import the fully built units from its Thailand factory. Isuzu Motors India Private Limited deputy managing director Shigeru Wakabayashi earlier this month said these products would be completely localised after establishing the facility that would have a capacity to produce 100,000 units a year.

The location offers a close proximity to the well-developed auto ancillary industry in Tamil Nadu in addition to the port facilities in both the states.

“The company has offered to invest Rs 1,500 crore in the first phase and Rs 4,000 crore in phases. It also wants to start the production of cars at a later stage,” the official said.

The Andhra Pradesh government, in turn, has offered sales tax waiver for a particular duration in proportion to the size of investment, according to the official. The company had held several rounds of discussions with the state government authorities in the past after it began scouting for a suitable location in South India.

Currently, Mahindra & Mahindra is the only major player to have its manufacturing operations in AP at Zahirabad from where it produces tractors as well as SUVs like Scorpio and Bolero.