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Renault and Nissan are to press on with plans to set up a manufacturing base on a greenfield site near Chennai in India, despite the withdrawal of their Indian partner Mahindra & Mahindra.

The threesome signed a memorandum of understanding with the government of Tamil Nadu for a plant at Oragadam, near Chennai, last February. The intention then was to build 400,000 cars and SUVs on the site, which would cost €686 million to set up over seven years.

Mahindra has now decided to use capacity in its existing plant at Chakan and elsewhere to meet its medium term plans and has withdrawn from the three-way Oragadam scheme. The company still has plans for research facilities, a test track and a tractor plant in the area and says it will evaluate a separate automotive plant of its own in the region.

Renault and Nissan said in a joint statement that they were maintaining their intention to invest in carmaking at Oragadam.

Mahindra and Renault already have a joint venture that makes the Logan in India. The car has taken an 11 per cent market share of the C segment since its launch in May. The pair are also evaluating the launch of the Logan MCV in India.