Auto major Mahindra & Mahindra (M&M) has proposed to invest Rs. 30 billion (US$ 571 million) to set up a manufacturing plant in Uttarakhand, according to the state government.

"Mahindra group has proposed to establish a project worth Rs. 30 billion ," the state government said in a statement.

M&M President (Automotive and Farm Equipment Sectors) Mr. Pawan Goenka had a meeting with state Chief Minister Mr. Vijay Bahuguna on April 26th, it added.

According to the statement, M&M plans to set up a manufacturing unit with a production capacity of 250,000 units annually.

The company has sought 500 acre land for the plant and Rs. 2 billion for supplier unit, it added.

During the discussions, Bahuguna said the government would try to provide land to M&M at Sitargunj for the project, the statement added.

When contacted, an M&M spokesperson said: "Mr. Goenka met the CM of state to discuss potential future investment in the state. The discussion was preliminary and we cannot comment on the details."

The development comes at a time when M&M threatened to stop further investments in Maharashtra, unhappy over the state government's change in VAT refund policy.

Earlier in February, Mr. Goenka had said that M&M may not go ahead with the next phase of investment to the tune of Rs. 40 billion at its Chakan facility in Maharashtra as the state government had decided to give VAT refund only on vehicles sold in the state and not on all the products made there.