CORRECTED - CORRECTED-UPDATE 1-Tata Motors raising about $750 mln - sources

(Corrects figure in headline from $600 mln)

* Overallotment option exercised - source

* Proceeds to pay down debt - source (Updates with details, increased size of deal)

MUMBAI, Oct 9 (Reuters) - Tata Motors Ltd (TAMO.BO) (TTM.N), India's largest commercial vehicles maker, is raising about $750 million through an issue of global depositary receipts (GDRs) and convertible bonds that was expanded on robust investor demand, a person with direct knowledge of the situation said.

The company is raising about $375 million in GDRs at $12.54 each and another $375 million through five-year convertible bonds with a 4 percent coupon, the source said.

Another source said the company planned to use the funds to cut its debt.

Tata Motors confirmed it was raising $600 million through the sale of GDRs and convertible bonds with an option to increase the deal size.

Indian companies have been on a fund-raising spree in recent months, taking advantage of buoyant markets.

Friday's Tata Motors offering came a day after the country's top engineering and construction firm, Larsen & Toubro Ltd (LART.BO), raised $600 million through a sale of shares and convertible debt.

The Tata Motors deal was being arranged by Citigroup (C.N), Credit Suisse (CSGN.VX) and JPMorgan (JPM.N). (Reporting by Narayanan Somasundaram, Janaki Krishnan and Tony Munroe; Editing by Ranjit Gangadharan)