Renault SA announces plans to build passenger cars in India with domestic auto maker Mahindra & Mahindra Ltd., Renault CEO Carlos Ghosn announces at a Paris press conference today.

The new plant will open in 2009 with initial annual capacity of 300,000 units that will expand to 500,000 annually in five years.

Vehicles built at the plant will be badged as both Mahindra and Mahindra-Renault but marketed by Mahindra-Renault and sold through Mahindra’s Indian sales network.

“The success of the partnership is scripted within the India growth story and Mahindra and Renault’s shared vision for its customers,” Anand Mahindra, Mahindra & Mahindra vice chairman and managing director, says in a statement. “The strengths of Mahindra and Renault will go a long way in making India a key global market.”

Renault says it plans to establish a powertrain facility onsite, as well, and that the location of the assembly plant will be announced shortly.

The French auto maker says it will utilize its engineering and manufacturing expertise in the venture, while Mahindra will be relied on for its knowledge of the Indian market and its supply base.

Renault and Mahindra began a smaller joint venture in India last year, investing $160 million to build 50,000 units annually of Renault’s entry-level Logan sedan beginning in first-half 2007.

Renault’s alliance partner, Nissan Motor Co. Ltd., will decide over the next fours months whether to join the partnership in India, as well, Ghosn tells the Associated Press.

He does not specify the investment in the new Indian plant, saying only it will be less than what Nissan invested in a new plant in Guangzhou, China.

Meanwhile, Nissan says while it will not establish an Indian JV with Suzuki Motor Corp., as the two companies have been exploring, but will continue work together on Indian production of Nissan vehicles for Europe.