Moscow: Russian tractor major Traktornye Zavody is going to set up a production facility in India to assemble small industrial track-type tractors.

According to Traktornye Zavody president and owner Mikhail Bolotin, the production unit will cost between $1 million and $1.5 million to build. The plant will assemble 150-200 vehicles every year from 2009.

Traktornye Zavody comprises 15 large engineering plants that produce agricultural, road building, timber harvesting and military equipment. The concern's consolidated earnings in Jan-Aug 2007 totalled about $766 million. The Russian holding has been active in the Indian market since 1999.

India, where Traktornye Zavody products are in high demand, has also established the licensed production of armoured carriers BMP-1 and BMP-2. These carriers are designed by Kurganmashzavod, a member of Traktornye Zavody holding.

The industrial tractors will cost between $150,000 and $270,000, depending on the model.

By beginning production in India, Traktornye Zavody will save on high import duties, enabling the company to sell its tractors at a lower price. Russian experts believe that cheaper labour and infrastructure in India will reduce production costs by as much as 30 percent.

According to Nikolai Gromov, deputy director of Traktornye Zavody, the holding is planning to establish similar assembly operations in Ukraine, Kazakhstan and Uzbekistan.

Apart from industrial tractors, Traktornye Zavody also intends to manufacture air conditioners in India at the same site through the Malaysian company, Dunham-Bush, which the holding bought at the end of last year. It plans to invest $10 million in this project.