Tamil Nadu: RPG group’s flagship company CEAT will invest Rs 4,000 crore in a greenfield tyre manufacturing unit near Sriperumbudur, about 40km west of Chennai. Tamil Nadu cabinet, which met on Wednesday evening, cleared the new project and offered a structured incentive package for the unit, which when becomes operational in about a year, will directly employ 1,000 people.

The plant is sure to come as a big boost for the state which has witnessed a political slugfest over poor investment. Early this year, the state had lost out on a big investment in manufacturing as Korean auto major Kia Motors chose Anantapur in Andhra Pradesh to set up its first passenger car plant in the country.

“CEAT has been in discussion with us over the past few months. We have been hand-holding them all through, and we have now offered them a structured incentive package to facilitate the investment,” a government source told TOI. CEAT had on its own acquired around 150 acres of land in Madhuramangalam village near Sriperumbudur for setting up the project, the source added.

Work on establishing the project will commence soon. “The company’s target is to supply to automobile OEMs located nearby and around Chennai including passenger car makers Hyundai, Renault & Nissan and Ford, commercial vehicle units of Ashok Leyland and Bharat Benz as well as two-wheeler plants of Royal Enfield and Yamaha. It intends to supply to plants not only in Tamil Nadu, but also those located in other parts of the country,” the source said.

Unlike automobile manufacturing, which heralds in a whole lot of ancillary units to come up nearby, tyre units bank more on front-ending operations with OEMs, barring a few suppliers establishing themselves nearby. “In addition to incentives, the government has assured uninterrupted power supply for the CEAT plant, besides water supply. Chennai Metro Water is in the process of putting up 45 mld capacity tertiary treatment reverse osmosis (TTRO) plant near Koyambedu in Chennai to treat sewage water. A pipeline is being laid to connect Sriperumbudur to this plant, so that the treated water can be supplied to industries. CEAT plant will get this water to be used in its manufacturing process at the tyre plant,” the state government source said.