Carmakers Nissan and Renault have confirmed they will create a 400,000 capacity production site in the Indian city of Chennai in the southern state of Tamil Nadu.
The two car giants will work alongside Indian firm Mahindra to complete the project, which will cost the three companies a minimum total investment of $902 million (£459.6 million) in the site during the next seven years.
As part of the deal Mahindra will possess an equity holding of 50 per cent and the remaining half will be held jointly by Renault and Nissan.
In a joint statement the Japanese and French carmakers said the "unique industrial complex" will contain vehicle production for each firm.
Chennai, in the far south of India, was chosen as the location for the new production site due to its well-developed automotive and components industry, highly-educated workforce and the city's infrastructure; such as its port facilities. It is believed the new production plant will "help make Chennai a truly global player in the automotive business".
Carlos Tavares, executive vice president of Nissan, commented: "Through the strong partnership of Renault and Mahindra, Nissan is able to leverage the alliance and gain a rapid entry advantage for local manufacturing in India.
"Nissan was able to evaluate several different options for our first manufacturing base in India but the advantages of working with our alliance partner and their local Indian partner was compelling," he added.
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