Fiat India Automobiles on Monday said it will invest Rs 2,341 crore more at its existing Ranjangaon facility in Pune to ramp up its capacity.
With this investment, the overall investment of Fiat India in Pune will increase from Rs 4,020 crore to Rs 1,679 crore.
Fiat India is a 50:50 joint venture between Tata Motors and Fiat Group Automobiles.
Fiat India signed a memorandum of understanding with the Maharashtra government today for the investment.
"This is a watershed project because this is for the first time that such a deal has been done anywhere in the world," Tata Motors MD Ravi Kant told reporters at the MoU signing ceremony.
This is the 95th MoU signed by the Maharashtra government attracting an investment of Rs 1,19,000 crore since June 2005.
"Both the players would invest Rs 650 crore each and the remaining would come from debt", Fiat India CEO Rajeev Kapoor said.
Fiat India plans to ramp up its operation to produce up to 2 lakh cars, 3 lakh engines and 3 lakh parts and accessories, according to a statement.
At present, Fiat has a capacity to make 1 lakh cars and 2 lakh engines.
At full capacity, the Ranjangaon unit is expected to employ 4,000 people.