Nissan may build $500 million plant in India

Mumbai: Japanese auto major Nissan Motor is planning a $500 million venture in India, according to a Japanese newspaper. The 2-lakh units per annum plant would start commercial production in 2009. Nissan is reportedly working on an all-new small car for the Indian market, which would sport a 1,000cc engine. Only a third of the production would be marketed in India and the rest would be exported.

Nissan would also bring in some of its major component suppliers to India. Together with the investments by the component manufacturers, total investments in the Nissan venture may cross $800 million – the paper said.

Nissan had last year indicated a manufacturing JV with Suzuki and Maruti, mostly for exports. This plan was later dropped and the company indicated that it may join the Renault-Mahindra JV to build a new 5-lakh units per annum plant. Reports suggest that Nissan may still join the Renault-Mahindra venture, but is considering a new plant of its own as India is a strategic market with very high growth potential.

Renault holds a 44-per cent stake in Nissan while Nissan in turn holds a 15 per cent stake in Renault. Carlos Ghosn, who is credited with turning around Nissan in the late ''90s, heads both the companies

While Nissan is considering multiple locations in the East and West coast, Gujarat is believed to be the frontrunner. The company is reportedly looking at a location with port facilities to support exports. General Motors has already started work on a new plant in Gujarat to manufacture its small car, Chevrolet Spark.

Over the last few years, India has emerged as a major manufacturer and exporter of compact cars. Good quality component suppliers with high engineering skills, fast growing domestic markets and active government support have encouraged global auto companies to look at India as a manufacturing base.