BMW is now considering contetsing the Indian market more seriously and has sought permission from the Foreign Investment Promotion Board (FIPB) to set up a plant at Chingleput in Tamil Nadu with an investment of around $US40 million.

The German automaker currently operates only through two dealerships, one each in Delhi and Mumbai, the two major centres for sales of expensive cars.

BMW India Private Ltd was incorporated in 1997 when BMW tried to enter India through the Munjal family of Hero Motors. That plan was abandoned soon afterwards because the automaker and the government could not agree on the local content level of cars to be assembled in India. BMWIPL will be the company's entry 'vehicle' and BMW will take a 100 % stake the company.

The German carmaker plans to first assemble cars from CKD kits as it does in China and some other markets. However, with the Indian supplier industry growing, both in terms of quality and capabilities, BMW is more open to procuring at least some components locally. It has also sought permission to import completely assembled cars from overseas.

BMW's two dealerships sell nearly its entire range but volumes are very small compared to rival Mercedes which already has an assembly unit in India.

Deepesh Rathore / Tilak Swarup