Volvo's Indian subsidiary has been exporting luxury air-conditioned coaches to South Asian countries, including Bangladesh and Sri Lanka, for two years and now has its sights set firmly on Europe.
“We will be the first bus company to export to the European market from India, taking advantage of lower manpower costs and neutral duty,” Volvo Buses Corporation president Håkan Agnevall told reporters.
The announcement will be welcomed by Modi's business-friendly government, which was elected last year on pledges to revive a sluggish economy, including attracting some much-needed foreign direct investment.
In September, the government launched its 'Make in India' initiative in a bid to tell the world that India was open for business.
Volvo has been operating in India for 15 years. In 2012, it announced it was investing four billion rupees ($63 million) to double output at its plant in Hoskote, 40 kilometres (25 miles) east of Bangalore, to 1,500 buses a year.
“It's a milestone for us to export buses from India to developed markets in Europe though we are a European company and have a major presence there with a couple of manufacturing plants in the continent,” Agnevall said.
But while European markets are being targeted, a spokesperson for Volvo Buses told The Local on Tuesday that there were no current plans for the coaches to end up in Sweden.
“They will for now not be sold back to Sweden, just other European markets. We will reveal the information later in the year,” said Media Relations Manager Helena Lind.