The 28-acre plant would be at OneHub Chennai and is scheduled to go into operation from January 2019, Yamaha said in a statement.
Commenting on the development, Yamaha Music India Chairman Takashi Haga said: "With this new facility, we will be able to serve both international and domestic markets, providing high-quality musical instruments that cater to the growing market at competitive prices."
Yamaha is the fifth Japanese company to set up base in OneHub Chennai, it added.
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