Peugeot says to build 650 mn euro car factory in India

French carmaker PSA Peugeot Citroen said on Thursday it had chosen the Indian state of Gujarat to build a 650-million-euro ($928-million) factory capable of turning out 170,000 vehicles per year.

The integrated manufacturing and engine and gearbox facility, which should come on line in 2013, will generate 5,000 new jobs in the rapidly developing Sanand automotive cluster, the company said in a statement.

"We view India as one of the most important and dynamic markets in the world, with forecasts of it becoming the third largest automotive market by 2020," PSA Peugeot Citroen chief executive Philippe Varin was quoted as saying at a signing ceremony with Gujarat state officials.

The factory is expected to begin manufacturing a mid-size family saloon (US: sedan).

PSA Peugeot Citroen announced in February that it intended to begin manufacturing in India. It made an unsuccessful attempt to set up in the country in the 1990s.

© 2011 AFP