India said to discuss RM24.7b Lotte, Peugeot ventures

By BLOOMBERG

NEW DELHI • South Korean conglomerate Lotte Group and French carmaker PSA Group have separately discussed proposals to invest as much as US$6 billion (RM24.66 billion) combined in India, a move that would boost Prime Minister Narendra Modi’s attempts to attract foreign capital in Asia’s third-largest economy, a person with direct knowledge of the matter said.

Lotte may invest between US$3 billion and US$5 billion in the next five years, the person said asking not to be identified as the proposals are preliminary.

The South Korean firm intends to invest in retail, chemicals, food processing and real estate, as well as develop railway platforms in the country, the person said. Separately, PSA, the maker of Peugeot and Citroen cars, plans to spend about €1 billion (RM4.87 billion) to build a car factory and an engine plant in southern India, the person said.

Modi’s flagship “Make in India” plan encourages foreign firms to manufacture locally by offering easier land acquisition, pruning the number of approvals and, in some cases, offering incentives. The efforts have helped India move up in the World Bank’s ease of doing business survey and achieve an unexpected credit rating upgrade last week by Moody’s Investors Services.

Lotte plans to develop urban real estate by adopting railway stations and maintaining them, the person said. In return, the railways will allow the group to operate restaurants, hotels and shops, the person said. The confectionery arm of Lotte is in the process of setting up a new factory in India, according to the person.

“Lotte is exploring various business opportunities in India and other countries, but there is nothing confirmed or discussed in detail as to which areas to enter and how much money to invest,” Lotte said in a statement.

A Paris-based spokesman for PSA referred to a statement in January on the cooperation with CK Birla Group in India, which included an initial investment of €100 million.

Expanding its business in India may help the Seoul-based group to hedge the risks it faces in neighbouring China. When tensions between China and South Korea simmered over a US decision to deploy a missile shield on South Korean soil earlier this year, Lotte was among the hardest hit companies as Beijing retaliated by hindering operations of Korean companies in the mainland.