UPDATE 1-Renault to decide on small car with Bajaj soon

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NEW DELHI, Jan 10 (Reuters) - French car maker Renault RENA.PA will decide within the next six weeks whether to join India's Bajaj Auto in a venture to build a small car, a senior company official said.

Bajaj BJAT.BO on Tuesday unveiled a concept small car and said it wants to make and sell it in India and abroad in collaboration with Renault and Japan's Nissan Motor Co 7201.T, which is 44 percent owned by Renault.

“We are presently doing a feasibility study ... We hope we will complete it in one-and-half months,” Renault’s India chief Sylvain Bilaine told reporters on Thursday at an auto show in the Indian capital.

“In a month or two we will know whether we are able to go to the next step, which is full development and manufacturing.”

Small car sales, which make up more than two-thirds of India's domestic market, are expected to nearly double to 2 million units a year by 2010, helped by rising middle-class incomes. Tata Motors Ltd TAMO.BOTTM.N on Thursday launched its much-awaited $2,500 car at the auto show, and global firms like Volkswagen VOWG.DE, Toyota Motor Corp 7203.T, Honda Motor Co 7267.T and Fiat FIA.MI are also looking to build and sell low-cost cars.

Bilaine said a Renault-Nissan-Bajaj car would be totally different from the model showcased by Bajaj on Tuesday.

He said Renault was bullish on India and would invest at least 44 billion rupees ($1.12 billion) by 2015 in a manufacturing plant and a technology centre, both in the southern city of Chennai.

“On the technology centre we will invest 70 million euros $103 million). In manufacturing ... we will be investing with Nissan 40 billion rupees minimum,” he said.

The Chennai plant will produce 400,000 cars per year for Renault and Nissan and will employ 4,000 people by 2010, while the tech centre will aim to develop India specific models and employ 1,500 people by 2009, the firm said in a statement. Renault, Nissan and India's Mahindra & Mahindra Ltd MAHM.BO in February committed investments of 40 billion rupees in a car project in India, but on Tuesday the Indian firm said it would defer its share of the spending.

“It was their business decision,” Bilaine said, adding the overseas firms would not seek another partner and would go it alone.

The firm also aims to source 12 billion rupees of auto parts from India for Renault plants around the world.

For additional stories, pictures and video from the Auto Expo go to here

($1=39.3 rupees)

($1=0.68 euros)

(Reporting by Rakesh Sharma, Editing by Mark Williams)

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