Volvo will start Indian assembly with the XC90 SUV, seen here on the line in Sweden

Volvo will start Indian assembly with the XC90 SUV, seen here on the line in Sweden

Geely's Volvo Cars is to start vehicle assembly operations in India in 2017, in conjunction with Volvo Group, the truck, bus and construction equipment manufacturer which already builds vehicles in the country.

"This positions the company for further growth in the fast-expanding premium car segment in India," Volvo Cars said in a statement.

Rivals such as Audi, BMW and Mercedes-Benz all have assembly plants in India.

Volvo will start with the XC90 SUV produced at the plant near Bangalore in southern India. The focus will be on the automaker's SPA modular vehicle architecture and additional models will be announced later.

Volvo Cars will make use of Volvo Group's existing infrastructure and production licences near Bangalore.

No further contract and financial details will be disclosed, the automaker said in a statement.

"I am pleased that as of this year we will be able to start selling Volvos that are made in India," said Hakan Samuelsson, president and chief executive of Volvo Cars.

"Starting vehicle assembly in India is an important step as we aim to grow our sales in this fast-growing market and double our market share in the premium segment in coming years."

"We are delighted to announce the commencement of an assembly unit," said Tom von Bonsdorff, managing director, Volvo Auto India. "It's a sign of the company's strong commitment to India."

Volvo's decision to start assembly in India and market its vehicles as 'Made in India' fits well with a similarly named initiative launched by the national government several years ago, which seeks to highlight and promote Indian manufacturing prowess.

While the Indian premium market is still relatively small, it is forecast to grow rapidly in coming years. Volvo currently has a premium segment share of close to 5%, and aims to double this by 2020. In 2016, it sold around 1,400 cars in India, up 24% year on year. Year on year sales growth in the first four months of 2017 amounted to more than 35%.