The suspense on where the German auto major Volkswagen AG is going to locate its plant finally seems to be over. Andhra Pradesh looks all set to bag the Rs 1,700 crore (Rs 17 billion) Volkswagen car project in India.

The German auto major's proposed project has been in the news for the last six months on whether it would be locating its unit in Tamil Nadu, Maharashtra or Andhra Pradesh.

Speaking to the media at the Visakhapatnam airport, N Chandrababu Naidu, the chief minister of Andhra Pradesh, said that Volkswagen had in principle agreed to establish its car manufacturing unit in Visakhapatnam and a final announcement would be made shortly.

The German auto company is expected to manufacture light commercial vehicles and cars in India, though at this point of time it is not known what models the company will bring into India. At the moment Volkswagen is present in India through the Czech automobile brand Skoda, which it had acquired.

Volkswagen AG designs, manufactures and markets cars, commercial vehicles and trucks under the brand names Volkswagen, Audi, Seat & Skoda.

Several state governments in the country, particularly Tamil Nadu, had tried attracting the German auto major to invest. What specific reliefs or concessions the Andhra Pradesh state government is offering Volkswagen is not known at the moment.

It was only in late September that a high level delegation from Volkswagen had visited Chennai to hold talks with top government officials on the prospect of setting up manufacturing operations in the state.