BMW plans to build the 3 and 5 series at an assembly plant in Tamil Nadu, 25 miles (40km) from Chennai in South India.

The vehicles will be imported in completely knocked down kit (CKD) form from Germany through Chennai Port and assembled at the 22-acre Maraimalai Nagar site in the Mahindra Industrial Park.

But BMW CFO Stefan Krause said: “We are still awaiting final (Indian government) approval for CKD production.”

The assembly plant would require an initial investment of around €20 million (INR1.06billion).

BMW did not reveal capacity but noted that the minimum volume for a viable plant would be around 1,000 cars a year. Such a facility would create 160 jobs directly and a further 320 indirectly.

The company chose Chennai due to its proximity to the port.

Krause stressed that the cost advantage to buyers from CKD assembly would be significant. CKD imports attract 15% duty compared to 60% on completely built up (CBU) imports.

BMW would continue with CBU imports of other models after local assembly of the 3 and 5 lines starts.

In 2004, BMW sold just 122 fully imported cars in India.

Deepesh Rathore