NEW DELHI: Delhi-based auto component maker JBM Auto has formed a joint venture with Italian busmaker BredaMenarinibus to manufacture luxury buses in India.

The Indo-Italian venture will set up a plant at Kosi, near Faridabad in Haryana, and produce 2,000 buses every year initially, as part of a 500-crore investment plan, people with knowledge of the development told ET. The facility will go on stream in the next few months, they added.

JBM Auto is part of the $1.2-billion JBM Group, which has 35 manufacturing plants and four engineering and design centres across 18 global locations. BredaMenarinibus has been manufacturing buses for about 90 years now.

Nishant Arya, executive director of the JBM Group, confirmed the development. "We have been in discussion for a long period and the final stages of the agreement have been reached based on the needs of the Indian commercial vehicle industry," he said.

JBM Auto supplies auto parts to carmakers like Ford, Honda and Fiat. It is now looking to tap the country's top-end bus market, where it will have to compete with Volvo, Mercedes-Benz, Isuzu and Scania.

If the deal goes through, JBM will become the first Indian auto parts maker to graduate to full-fledged vehicle manufacturing. The persons cited above said JBM plans to unveil its buses at the auto fair scheduled for February 2014. In India, about 50,000 buses are sold every year across cities, towns and rural areas.

People in the know said it will initially produce 60-seater CNG city buses and diesel-powered coaches, which will be high on local-sourced parts. A second manufacturing facility of the joint venture is likely to come up in the industrial cluster of Ballabhgarh, also in Haryana, they added.

On use of locally produced parts, Arya said, "We are working out the details with our partners to source the critical parts of these buses. We will share the fine points close to the signing of the deal. We are in talks for with many players for this partnership to strike the right alliance and deliver the right products for the Indian market."

People close to the development said JBM's buses will have a monocoque system, disc brakes and an independent front suspension, among other features.

The development comes at a time when the government id planning to procure 10,000 new buses under phase 2 of the Jawaharlal Nehru Urban Renewal Mission. Notwithstanding the current downturn in the commercial vehicles segment, JBM Auto is bullish about its bus venture as the sector is beginning to see demand from state governments and urban municipal bodies for buses

Source : economictimes.indiatimes.com