US auto giant Ford said Thursday it would invest $1 billion to build a vehicle assembly and engine plant in India as it ramps up production to exploit the country's burgeoning car market.
The new factory in the western state of Gujarat will employ around 5,000 workers and will be the firm's second in India.
"Ford has very aggressive expansion plans in India and in Asia Pacific and Africa," Joe Hinrichs, president of Ford Asia Pacific and Africa, told reporters in a conference call.
This new investment "will be important in realising our growth strategy," Hinrichs said, calling India "one of the most dynamic regions in the world".
The facility in Sanand, 40 kilometres (25 miles) from Gujarat state's main city of Ahmedabad, will have an initial annual capacity of 240,000 vehicles and 270,000 engines.
Ford already has a plant near the southern Tamil Nadu port capital of Chennai, where it manufactures small cars such as the Fiesta as well as the Endeavour sports-utility vehicle.
Ford's Chennai plant can assemble up to 200,000 cars a year.
The US group will begin building on the Gujarat site this year with the first vehicle and engine slated to come off the assembly lines in 2014.
Thursday's announcement brings the US car giant's total investment in India to some $2 billion.
The company aims to introduce more products from its global portfolio and other Asia Pacific and African markets into India as it seeks to tap the country's growing domestic car market.
"This is an investment in the future of Ford globally," said Hinrichs.
"These new state-of-the-art facilities will help us reach the goal of increasing worldwide sales by nearly 50 per cent by mid-decade to about eight million vehicles a year.
Gujarat has emerged as an investment magnet for car and other manufacturers with its business-friendly policies, despite controversy surrounding its Hindu nationalist chief minister, Narendra Modi, who is accused of turning a blind eye to deadly anti-Muslim riots in 2002 -- a charge he rejects.
Some 60 to 70 per cent of Ford's growth is expected to come from the Asia Pacific and Africa region over the next 10 years.
India has become a battleground for global vehicle manufacturers such as Ford, General Motors and Volkswagen. They have been hoping to offset sluggish sales at home by steering towards India and China, seeing huge potential in their billion-plus populations.