The Renault Nissan alliance is to spend around US$300m to construct a new assembly plant in India to build its budget Datsun brand cars, the Nikkei business newspaper has reported.

This plant will have an annual output capacity of 200,000 units and production is slated to start in 2014, along with lower-priced Renault models under development.

It will be sited next to the existing Nissan-Renault joint venture plants near Chennai and the new facilities will raise capacity there to 600,000 units annually.

The alliance also uses the Chennai plant as an export base for Europe, the Middle East and Africa. The new plant will allow an increased export capacity to help Renault and Nissan accelerate their moves into emerging markets.

Nissan is reviving its old Datsun brand for emerging markets, planning to initially roll out two models while the new plant is also expected to produce a new model to be developed for India.

The proposed Indian model will target the burgeoning middle class. Nissan aims eventually to have Datsuns account for up to half of its new vehicle sales in India.

Nissan's sales in India grew 46% on the year to 33,000 units in 2012. The company's market share stands at around 1%, a figure it aims to lift to 10% in fiscal 2016 with its low-priced offerings.