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LONDON (Reuters) - Luxury car maker Jaguar Land Rover, part of Indian group Tata Motors, said it will invest 355 million pounds on a new engine plant in central England, which fought off competition from India with backing from the government.
The government, keen to support manufacturing in Britain, will provide up to 10 million pounds for a plant expected to create 750 jobs and thousands of jobs across the wider economy.
"JLR choosing Wolverhampton for its new engine plant in the face of tough international competition is a tremendous boost for manufacturing in the UK and the West Midlands in particular," said business secretary Vince Cable.
Cable, a member of the Liberal Democrat junior coalition party, marked the announcement by visiting a JLR production plant in nearby Solihull. The Lib Dems are holding their annual conference in Birmingham.
Mike Wright, executive director at Jaguar Land Rover said they had considered building the facility in a number of locations within the UK and outside the UK.
"One obvious location would have been India," Wright told journalists.
"There are a whole host of factors that go into these decision ... but on the balance of all of those factors, we determined with the support of Tata Motors, in this instance, the UK was the best option," he said.
Jaguar Land Rover already employs more than 19,000 people in Britain and supports up to 140,000 jobs. It has been boosted by strong demand from emerging markets such as Russia and China for its cars.
"As we invest 1.5 billion pounds a year for the next five years on new product developments, expanding our engine range will help us realise the full global potential of the Jaguar and Land Rover brands," said Ralf Speth, JLR CEO.
Britain is seeking to support manufacturing as part of efforts to rebalance an economy that had been over-reliant on financial services.
Britain's car industry is now largely foreign-owned but employs around 800,000 people and accounts for about 10 percent of the country's exports.
The chosen site in the West Midlands, one of the hardest hit regions in the UK during the recession, will manufacture a family of 4-cylinder petrol and diesel engines and help drive efficiencies across the other UK facilities.
"Clearly, situating it almost equidistant between our Halewood, Solihull and Castle Bromwich plants does have efficiency benefits," said Wright.
As part of its growth strategy and investment, Jaguar Land Rover is targeting 40 new products over 5 years, as it eyes emerging market growth.
"(The site) will enable us to accelerate our new products to penetrate new markets," said Wright.
"Our latest investment decision follows a period of rising sales, rising demand and rising profitability," he said, adding that the business is performing in line with expectations.
Speth said last week at the Frankfurt auto show that Jaguar Land Rover (JLR) expected to decide on a local partner for production in China by the end of this year.
($1 = 0.633 pound)
Editing by Helen Massy-Beresford and Hans-Juergen Peters