Modi to convince Maruti to shift operations to Gujarat

Gujarat chief minister Narendra Modi will meet senior executives of Suzuki Motor Corp in Japan next week to persuade them to shift the entire operations of its Indian arm Maruti Suzuki to his state from Haryana, evoking parallels with the strategy he employed four years ago to lure the Tata Group.

A person familiar with Modi's plans said the latest outbreak of labour trouble at Maruti's factory at Manesar in Haryana, where workers attacked managers and set fire to property on Wednesday, has opened a "Sanand kind of situation" and the Gujarat government is keen to use it to its advantage.

In October 2008, Modi famously convinced Group boss Ratan Tata to shift a factory to build low-cost car Nano to Sanand in his state, after a two-year-long agitation by farmers over land compensation hobbled production at the original plant in Singur in West Bengal.

Modi will set aside most of July 25 for "detailed discussions" with Suzuki and Maruti top brass, the person said. "It shows his seriousness about bringing the company to Gujarat."

A senior government official who will accompany Modi to Japan says the CM was due to meet Suzuki chairman Osamu Suzuki and the head of the Indian unit Shinzo Nakanishi at the carmaker's headquarters in Hamamatsu. Modi is travelling to Japan - his last visit to a foreign country before elections in December - for five days from July 22 to woo businesses to invest in Gujarat.

Maruti, India's largest carmaker, might need little convincing from Modi due to the company's troubled history with workers at Manesar. Last year, the company lost production worth more than 2,500 crore due to weeks of labour unrest at the same plant, which significantly depleted its market share. The latest round of violence has claimed a life of a senior manager and could shut the Manesar plant for a month.

Last March, Maruti Suzuki chairman RC Bhargava told ET that the company will cease car production at Gurgaon, where another factory is located, and turn it into an engine hub. He said Maruti will shift the production from Gurgaon to Gujarat where it is building a factory at Mehsana. Maruti also has a pre-export inspection facility near Mundra port.

Modi has made no secret of his ambitions to turn Gujarat into a global hub for the automobile sector. The only car manufacturer of note, before Modi came to power in Gujarat, was General Motors, which established a manufacturing facility at Halol in Vadodara district in the 1990s.

Under Modi's watch, Ford India, French carmaker PSA Peugeot Citroen, Bombardier of Canada and Asia Motor Works, a heavy commercial vehicle manufacturer, have followed Tata Motors to Sanand. Bike maker Hero MotoCorp's officials are scouting for land for a manufacturing plant.

Modi has wooed all these companies with a slew of tax benefits, which automobile executives have called "competitive". Gujarat also offers ports for possible exports to western markets as well as cost and logistics benefits thanks to good roads and uninterrupted power supply. The state has also developed auto ancillary hubs in Rajkot, Ahmedabad and Vadodara.

"Maruti will get all the benefits offered to other automobile companies in Gujarat," the state government official said.

During the trip, Modi is also scheduled to meet government officials, including Deputy Prime Minister Katsuya Okada, representatives of lobby groups such as JETRO and Japan Chamber of Commerce & Industry as well as executives of business houses such as Mitsubishi Corporation, Hitachi and Itochu Corporation.

The government is also hoping Maruti will be convinced by its offers for all Japanese companies - an ambitious proposal to build an industrial zone for executives - that want to invest in Gujarat. The zone will house townships, industrial parks and residential space, among other facilities, says the official.

An executive of an oil and gas company present in Gujarat had previously told ET that an increasing number of Japanese businessmen are coming to Gujarat because a large number of golf courses have sprung up in Gujarat. "The Japanese love golf. Ahmedabad alone has five golf clubs."