The proposed investment is for setting up an assembly facility primarily for passenger cars, which suits Indian terrain.
The company has already shortlisted Maharashtra, Punjab, Andhra Pradesh, Tamil Nadu and Karnataka for investment.
The plan is to set up a manufacturing facility at an investment of Rs 1,500 crore (Rs 15 billion) for making cars in the Rs 400,000-1000,000 range, generating an annual turnover of Rs 4,000 crore (Rs 40 billion) and providing employment to more than 3,000 people.
Referring to a recent media report stating that Volkswagen has decided to set up its facility in Maharashtra, the state industries secretary, V K Jairath, said, "It is too early and premature to comment. Maharashtra has got equal chances of investment from the company like other states."
Volkswagen has been scouting for locations
for the past couple of years, but decided to give a slow approach to get the best deals from the inviting state.
In its wait, the company also witnessed a bribery drama, last year, involving senior representatives of the company and Andhra Pradesh state officials.
One of Volkswagen's first products in India would be the small car -- Golf, which will compete with the likes of Maruti Swift and Hyundai Getz.
The Golf is Volkswagen's best selling model. Consumers love this car for its good fuel economy, excellent safety record and impressive features. Globally, the current Golf is nearing the end of a five-year run in 2006.
New models are expected to enter the maket in 2007. The car comes with a much sought-after TDI diesel model, which gives The TDI achieves 44-miles per gallon on the highway and holds an exceptionally high resale value.
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