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Volkswagen, Domestics Plan Big India Investment

NEW DELHI, Aug 28 (Reuters) - India's Tata Motors Ltd and German carmaker Volkswagen AG are among carmakers that have agreed to invest a total of 115 billion rupees ($1.9 billion) to expand their manufacturing capacity in the western state of Maharashtra.

The investments would be made under the state government's industrial project policy, which was initiated in 2005 to boost investment in the manufacturing sector.

Tata Motors, India's top automaker by revenue, and Mahindra & Mahindra Ltd, the country's largest utility vehicle maker, agreed to invest 40 billion rupees each, according to a statement issued by the Maharashtra government on Thursday.

Bajaj Auto Ltd said it plans to invest 20 billion rupees, while Volkswagen agreed to invest 15 billion rupees.

Mahindra's investment, expected to be made over seven years, will increase the capacity of its plant in Chakan, located 85 miles southeast of India's financial capital Mumbai, to 4.5 million vehicles from 3.2 million.

This will take the total investment in the plant, where it manufactures trucks and buses, to 80 billion rupees, Mahindra said in a separate statement to the stock exchange.

($1 = 60.4950 Indian rupee) (Reporting by Aditi Shah; Editing by David Holmes)