Kolkata: Ford India, a wholly-owned subsidiary of global auto major Ford Motors, will invest $500 million to set up a small car production facility and an engine manufacturing unit in India by 2010, a senior company official said here Tuesday.

"The investment is part of the company's capacity expansion plans in India," Ford India executive director (marketing, sales and service) Nigel E. Wark told reporters at the launch of the new Ford Fiesta 1.6S.

He said the new engine manufacturing facility would be constructed adjacent to the existing plant near Chennai. Both petrol and Ford's next generation diesel engines would be manufactured here.

Wark said the car plant capacity would be doubled to 2,00,000 annually, while the initial annual production capacity of the engine manufacturing unit is planned for 250,000 units, with the first engines coming off assembly by 2010," he said.

Ford has been in India since 1907, but received government approval to forge a 50:50 partnership with Mahindra and Mahindra in 1995.

In 1998, Ford got the green signal to increase its stake in the joint venture to 92.18 percent and the company was re-christened as Ford India Pvt. Ltd.