Nisshin Steel is planning to set up a plant in India to meet demand from Japanese OEMs, according to Reuters.

This would be the first investment in India by a Japanese steel maker.

Nisshin is looking at possible global expansion and India is an obvious target, according to company sources. However they said that India is just one country being researched and details have not yet been decided.

However, the Nihon Keizai Shimbun newspaper reported that Nisshin and its Spanish partner, stainless steel producer Acerinox, in which Nisshin owns a 10.9% stake, are planning to invest between $US266 and $US355m in India in 2007. Nisshin's share price rose more than 3% on the news.

The Japanese newspaper said that the plant could be located near Mumbai and would initially produce 200,000 tonnes a year of stainless sheet steel for non-automotive use. It could then be expanded to supply Japanese automakers.

Two other steel producers have recently announced investment plans for India. South Korean producer POSCO is building a plant in the state of Orissa to be completed by 2010, and Mittal has signed a memorandum of understanding to invest around US$9bn in the state of Jharkhand.