Having drawn over $3 billion investment this year alone in car manufacturing facilities, Chennai and its suburbs will in the next five years become a key automobile exporting hub, with investments expected to reach $15bn, the Tamil Nadu government says.

Tamil Nadu presently makes almost 1.3 million vehicles per year, the Economic Times reports.

“Rapid progress is expected in industrialisation over the next decade,” Chief Minister M Karunanidhi says, adding, “the State will rank highly with newly industrialised countries in the next five years.”

Currently, US automaker Ford, Korea’s Hyundai, German luxury car manufacturer BMW, and Franco-Japan automakers Renault-Nissan and amongst those who have set up manufacturing facilities in the area. Mitsubishi owns a plant in Chennai making SUVs and sedans, and Nissan is to produce a new MPV at its plant there.

Indian firms like TVS Motor Company, the country's second largest two-wheeler manufacturer, and Hinduja group flagship firm and commercial vehicle maker Ashok Leyland have also set up units in the region. Mahindra and Mahindra (M&M) will also be setting up a new passenger vehicle manufacturing plant.

Daimler AG, seeking to challenge Tata’s supremacy in India, has meanwhile announced plans to invest €700 million to increase its production capacity of its trucks in its manufacturing plant in Oragadam, 40 km from Chennai. The company is developing a truck especially for the Indian market that will hit the roads by 2012.

Tamil Nadu’s government has been focusing on continuous upgrading of infrastructure that is required to provide the state with critical competitive advantage, The Economic Times reports.

The state government is soon to announce an automotive sector-specific policy to expand its  strong automobile industry base, other reports said.