The company, which is also Europe's largest car maker, will follow in the footsteps of Maruti Suzuki, India's biggest passenger vehicle maker, which is also preparing to launch a similar car in the next three to four years.

Makham Dhalivaal, managing director, Volkswagen (passenger cars), said, "This Volkswagen car will be made in India from scratch. However, the plans are at a developmental stage and it's too early too talk about it."

A number of characteristics ranging from the basic design of the car on paper to the end product will be done in India.

As seven out of every ten cars sold in India are compact vehicles, industry experts suggest that VW will look at the small car category, like Maruti Suzuki, to tap the volume segment of the Indian car market, which swelled to 1.5 million units last year.

Maruti Suzuki (MSIL) has already begun work on the India car and aims to launch the automobile by 2011-12.

Maruti's car, too, will be developed from scratch. The company aims to double the number of engineers to 1,000 from 480 by 2010.

Meanwhile, VW has reiterated that it is on course to launch the Indian version of the Polo hatchback, its international best selling small car. The car, which is currently under development, will be tailored to suit buyer preferences here and will be launched in 2010.

VW's aggressive India plans are based on the country's expertise in low cost of vehicle manufacturing, which has led a number of international automotive giants, including Renault, Nissan, Hyundai, Honda, Toyota, General Motors and Ford, to exploit manufacturing opportunities here and make India their international export base.

The company today launched the Jetta, its second product in the country, pegged in the premium D segment of cars. The Jetta, which will compete with Honda Civic, Hyundai Sonata, Toyota Corolla and Skoda Octavia, will be priced in the range of Rs 12.97-Rs 16.67 lakh (Ex-showroom Delhi). The car will available in three variants with a diesel option.

VW currently sells the Passat luxury car, which is slated against the Mercedes C Class and BMW 3 Series, and also the Touareg sports utility vehicle.

Both brands together sold a total of 340 cars in the first 6 months of this year. The Passat and Jetta are locally assembled at Skoda Auto's facility in Aurangabad. The company is targetting sales of 20,000 units by the end of this year from the VW, Audi and Skoda brands.

VW's plant in Chakan, Pune is one year ahead of schedule, said company officials today. The company will inject more than Rs 3,500 crore into the plant which will have an initial production capacity of 110,000 units initially. The plant is expected to go on stream in the first half of next year.

Furthermore, a team of experts will visit India next week to study market analysis for the company's proposed foray into the commercial vehicle (CV) industry.

The company has said in the past that it is exploring the option of launching CV's in the Indian market.