GM invests $200 million in powertrain plant in Maharashtra, seeks to increase market share

"The Talegaon engine facility is an important component of GM's global strategy to establish a strong presence in this market. This is just one of a number of investments, totaling more than $1 billion that GM has made over the course of the last few years in emerging markets around the world such as China, Korea, Russia and India," Slym said.

"We cannot remain a global industry leader without a strong presence in the high-growth market of India. The new facility will enable us to continue expanding our product line-up in India," Slym said, adding that the launch of the small car will enable the company "to capture more opportunities in one of the fastest-growing vehicle markets in the world."

The small car will not compete with Tata Motors' Nano, which is being touted as the world's cheapest car with a price tag of $2500.

According to market data, India sold about 1.4 million four-wheelers last year compared to 5 million in China and over 10 million in the US. Annual passenger vehicle sales are forecast to rise to 2 million units by 2010 and Indian car sales are expected to more than quadruple to $145 billion by 2016, with small cars accounting for more than two-thirds of sales.

However, GM is not alone in this emerging small car market. Other automakers have also expressed interest in developing and marketing the small car in India.

With India's middle class population growing in number, several automakers including market leader Maruti Suzuki, South Korean Hyundai Motor Co. and India's Tata Motors have begun focusing on the low-cost small car segment.