Ford to put $500 million into India manufacturing

MUMBAI (Reuters) - Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) said on Tuesday it plans to invest $500 million in India to double manufacturing capacity by 2010 and make a small car and engines to compete more effectively in the fast-growing market.

Ford, which last week named India's top vehicle maker, Tata Motors Ltd (TAMO.BO: Quote, Profile, Research, Stock Buzz)(TTM.N: Quote, Profile, Research, Stock Buzz), as the preferred bidder for its luxury Jaguar and Land Rover brands, will double its capacity in India to 200,000 vehicles a year by 2010, it said.

Within the next two years it will begin production of a new small car for a bigger share of the dominant segment, and build an engine plant adjacent to its existing car plant near Chennai in south India.

"This new investment highlights the significance of India's role in our continued expansion and overall strategy for the Asia Pacific and Africa region," John Parker, executive vice president, for Asia-Pacific and Africa, said.

Ford will have an annual capacity to make 250,000 petrol and diesel engines, with the first diesel engines for its local Fiesta and Fusion cars rolling out in April, it said.

The small car, which will be an international design with local inputs, will not compete at the low end of the price spectrum, which will see a new Tata car priced at about $2,500.

"We're not going to be in that area. We're focused on the heartland of the market, the 300,000-400,000 rupee range," Parker said over the telephone from Bangkok.

Annual passenger vehicle sales in India are forecast to nearly double to 2 million units by 2010.

($1=39.3 rupees)

(Reporting by Rina Chandran; Editing by Ranjit Gangadharan)