Hyundai Motor said it planned to invest INR70bn (US$844m) in its Talegaon plant in Maharashtra, as the South Korean automaker to expand capacity in the world’s fourth-largest vehicle market.

The news came as domestic rival Tata started building cars in a former Ford plant in Sanand after a year-long retool.

Maharashtra deputy chief Minister Devendra Fadnavis, in a message posted on X over the weekend, said: “It was a great pleasure to meet Kim Un-soo, MD and CEO of Hyundai Motor India (HMI) along with executive director J W Ryu and HMI senior officials. They apprised me of HMI’s INR7000 crore investment in Talegaon, Pune."

Fadvanis said he expected the automaker to sign an investment agreement with the Maharashtra state government at the annual World Economic Forum summit in Davos, Switzerland, this week, adding: “We are absolutely delighted and welcome Hyundai to create a world class modern automobile manufacturing facility in Maharashtra."

Hyundai acquired the mothballed Talegaon plant from General Motors at the end of last year. The factory had been idle since the US carmaker pulled out of India in 2017.

Hyundai’s main Indian manufacturing operations are located near Chennai but these are currently operating at full capacity. At the end of last year, the company said it has had to prioritise production of higher margin models at the expense of the small Nios car due to the lack of capacity.

Once fully operational, Talegaon is expected to increase Hyundai’s annual production capacity in India to 1m vehicles from 820,000 at present. The automaker had previously said it also plans to invest $2.5bn by the end of the decade to expand capacity at Tamil Nadu.