DaimlerChrysler is reported to be about to sign an agreement with the western Indian state of Maharashtra for a new plant to make Mercedes cars.

A local spokesman declined to comment to Reuters on the size of the investment or the capacity of the plant, which would be located near Chakan, 110 km (70 miles) east of Mumbai (once known as Bombay).

Local media reports have indicated the company would invest about INR2.5bn ($US56m) in the plant, according to the news agency.

Mercedes makes about 2,000 cars a year in a facility leased from Tata Motors in Maharashtra, Reuters noted, adding that DC sold 2,121 units in India in 2005, nearly doubling sales from the previous year. It currently sells the Mercedes-Benz S-, E- and C-class models in India.