The company already has a vehicle manufacturing facility there in which it has invested $300 million.
The engine plant will have an annual capacity of 1.6-lakh engines which could be expanded to 3-lakh engines per annum, the company said.
The engine and car manufacturing plant will employ 1,400
people.
"We cannot remain a global industry leader without a strong presence in the high-growth market of India," General Motors' India President and Managing Director, Karl Slym, said.
"This will enable us to capture more opportunities in one of the fastest-growing vehicle markets in the world," he added.
The engine facility is expected to be completed by the first quarter of 2010.
