BMW has launched its X3 SUV in India.
Audi had a few days earlier announced a cheaper version of its rival Q5, the Hindustan Times noted.
"I am not worried about what competitors do...all I know is that if a consumer in this segment likes a car, he is willing to pay a premium for it," BMW India president Andreas Schaaf said. "I believe that will be the case with the X3 as well. I think we should be able to sell around 100 units a month with this car."
The premium SUV segment has largely been dominated by Audi with its Q5 and Q7 but the launch of BMW's X1 last December, still the cheapest luxury car in India, has tilted the scales in its favour.
Audi is planning to launch a similar priced smaller Q3 next year to counter the X1.
"As the Audi Q5 already has a broad fan base in India, this attractive price will now make this premium experience accessible to a wider customer base who aspire to own a luxury SUV," said Audi India head Michael Perschke.
"It is perfectly equipped to further strengthen our leadership position in the luxury SUV segment," he added.
"2016 will be the 100th year for BMW globally and we intend to stay the number one luxury car company in the world and in India," Schaaf said.