NEW DELHI -(Dow Jones)- General Motors Corp. (GM) will sign an initial agreement Thursday to build an engine and transmission plant for passenger vehicles in India, a senior executive at its local unit said Wednesday.

The plant will be set up at Talegaon, near Pune city, in the western state of Maharashtra, Ankush Arora, vice president in charge of marketing, sales and service at General Motors India Pvt. Ltd. said.

“We will be signing a memorandum of understanding with the Maharashtra government tomorrow (Thursday),” Arora said.

Arora declined to give details about the investment in the new engine plant and its capacity.

The engine plant will be built at same location where GM has established its second car factory in India. The new factory will start operations in the first week of September.

The Detroit-automaker has invested more than 14 billion rupees ($320 million) to construct the Talegaon car plant. The factory will have an initial capacity of 140,000 vehicles a year, which will expand GM India’s annual capacity to 225, 000 vehicles.

GM, which began its operations in India in 1996, currently makes six cars and sport-utility vehicles of the Chevrolet range, including the Spark minicar and the Optra sedan, at a 85,000-unit-a-year factory in the western state of Gujarat. It also imports and markets the Captiva sport utility vehicle.

The automaker also has a technical center, including a design studio, in India’s technology hub of Bangalore.

-By Santanu Choudhury, Dow Jones Newswires; +91-11-4356-3305; santanu.choudhury@dowjones.com

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MUMBAI, Aug 27 (Reuters) - General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) will sign an agreement with the western state of Maharashtra for an engine and transmission plant on Thursday, as it steps up the pace in one of the world’s fastest-growing auto markets.

The unit will be located in Talegaon, where GM’s second vehicle plant is scheduled to start operations next week, a spokesman said, declining to give details of the investment or the plant’s capacity to make engines.

“It is an extension of the investment GM has made in Talegaon for the vehicle facility,” he said.

GM is scheduled to hold a news conference on Thursday in Mumbai, where a memorandum of understanding with the state will be signed, the spokesman said.

GM, which makes the Chevrolet Tavera, Chevrolet Optra, Chevrolet Aveo and Chevrolet Spark in western Gujarat state, will have a capacity to make 140,000 vehicles in the new car plant, taking its all-India capacity to more than 225,000 units.

GM will build a new small car in the new plant as it aims to double its share of the market to 10 percent by 2010.

Annual passenger vehicle sales in India are forecast to expand to more than 2 million units by 2010, with small cars accounting for more than two-thirds of sales.

Tata Motors (TAMO.BO: Quote, Profile, Research, Stock Buzz) is scheduled to launch in October the mini Nano, billed as the world’s cheapest car, while Bajaj Auto (BAJA.BO: Quote, Profile, Research, Stock Buzz) is building a similarly-priced 100,000-rupee ($2,283) car with Renault (RENA.PA: Quote, Profile, Research, Stock Buzz) and Nissan Motor Co (7201.T: Quote, Profile, Research, Stock Buzz).

The Nano has been hit by protests over land acquired to build a plant for its production in West Bengal state, and Tata Motors’ chairman has threatened to move his factory elsewhere if the violence continues.

GM’s rival Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) said in May it had started operations at its engine assembly plant in Chennai in southern India, with an eventual capacity of 250,000 units. ($1=43.8 rupees) (Reporting by Rina Chandran; Editing by Mark Williams)