Swedish auto giant Volvo said Tuesday it planned to build buses destined for Europe's roads in Bangalore, providing a major boon to Prime Minister Narendra Modi's 'Make in India' campaign.
Volvo's Indian subsidiary has been exporting luxury air-conditioned coaches to South Asian countries, including Bangladesh and Sri Lanka, for two years and now has its sights set firmly on Europe.
"We will be the first bus company to export to the European market from India, taking advantage of lower manpower costs and neutral duty," Volvo Buses Corporation president Hakan Agnevall told reporters.
The announcement will be welcomed by Modi's business-friendly government, which was elected last year on pledges to revive a sluggish economy, including attracting some much-needed foreign direct investment.
In September, the government launched its 'Make in India' initiative in a bid to tell the world that India was open for business.
Volvo has been operating in India for 15 years. In 2012, it announced it was investing four billion rupees ($63 million) to double output at its plant in Hoskote, 40 kilometres (25 miles) east of Bangalore to 1,500 buses a year.
"It's a milestone for us to export buses from India to developed markets in Europe though we are a European company and have a major presence there with a couple of manufacturing plants in the continent," Agnevall said.