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AP keen to revive Proton car project

BS Regional Bureau in Hyderabad

Andhra Pradesh is open to reviving the earlier proposal of Malaysia to set up facilities for making Proton small car, state government officials said.

The issue cropped up when Mahathir Mohammed, the Malaysian prime minister, made a one-day stopover in the city last week on his way from Malaysia to New Delhi for the Ficci-Asean summit.

The Malaysian premier said his government's jinxed proposal to set up a plant of Perusahaan Otomobil Nasional Bhd, the manufacturer of the popular Proton cars, would be looked at afresh soon on his return to Malaysia.

Mahathir said Andhra Pradesh had a large, prosperous middle class population that would prefer a variety of passenger cars.

"There was no reason why Proton should not be one of them. Our earlier proposal for a Proton plant in India met with some hitches. When I go back, I shall have a look into the matter and take an appropriate decision."

Malaysia had mooted the proposal way back in the mid-1990s, much before western and Japanese majors set up their plants in this part of the world.

It wanted to put in India a competitor to Maruti 800, which then commanded three-fourths of the domestic passenger car market.

Three places were shortlisted for setting up the facilities: Chandigarh, Visakhapatnam and Chennai. During his visit to Malaysia in 1997, N Chandrababu Naidu, chief minister of Andhra Pradesh, laid claim for the location of the plant at Visakhapatnam, promising all facilities including free allocation of land.

Subsequently, a technical team visited the three sites during end-1997. Visakhapatnam was almost zeroed in as the place to set up the facility, and three of the seven models from the Proton stable - Iswara 1.3, Iswara 1.5, and Vira 1.5- landed in Hyderabad for road testing in domestic conditions.

The idea was not only to assess the performance of these cars in Indian conditions, but also to gather the views of users as a preliminary to deciding on their manufacture in India.

It was explained that Proton was targeting the domestic market and the proposed plant would use all the three technologies then in use in the main Proton plant in Malaysia: that of Mitsibushi of Japan, Citroen of France and Lotus of United Kingdom. That was the time when Proton had big plans - to roll out one million cars a year from different plants.

Apart from its two plants in Malaysia and one each in the Philippines and Vietnam, it was planning one each in India and South Africa to roll out the 1 million cars. But nothing materialised subsequently.

On some occasions, an apologetic Naidu traced the lack of follow-up action to "some problems facing the Malaysian economy."

In a one-on-one meeting sometime ago, Mahathir told Naidu that he was very keen on the plant being set up in Andhra Pradesh and he would personally look into the matter.

Mahathir seems to feel that co-operation between his country and Andhra Pradesh thus far had remained in infrastructure. "We want to enter manufacturing, too."

More importantly, he feels that Naidu, since his visit to that country, has adopted Malaysia as a role model for development and most of his programmes, including his Vision 2020, have been drawn on the lines earlier adopted by Malaysia.

While the government is aware of the keen competition in the automobile industry, it nevertheless feels that a major manufacturing facility would have a cascading effect on the economy of the state.

The employment potential will be tremendous not only in the plant but also in the large number of ancillaries that will spring up, it says.

It would also mean realisation of an old dream - making Hyderabad a hub of the passenger-car segment - an idea mooted in the early sixties when the then industries minister, A C Subba Reddy, realised the need for first putting in place the infrastructure and then seeking car manufacturing facilities.

Republic Forge Ltd was then put up as the biggest forge plant in the country, second only to the Heavy Engineering Corporation at Ranchi.

Indo-Nippon Ball Bearings was also started as a joint venture and several other automobile ancillaries set up in the city.

The Hyderabad plant of Hindustan Machine Tools was also geared up to meet the needs of the automobile sector.

But the licensing policy of the Centre in not allowing a fourth player - apart from Hindustan, Premier and Standard - in production for the passenger cars had put spanners on the states' efforts.

And as years passed, the few automobile ancillaries set up entered the sick industries list due to lack of patrons.

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