The company will manufacture these buses at its plant in Hoskote, near Bangalore within the next 6 months. All necessary clearances have been received from the centre and the state government, Volvo managing director Ravi Uppal said.

Speaking to The Financial Express

, Uppal said, "We were planning to begin our bus business in India with intra-city buses. However, owing to the delays caused by various factors we are going in for inter-city buses." Volvo plans to manufacture 500 to 1,000 buses during the next calender year.

The company had planned the manufacture of buses in its second phase of operations, commencing in the year 2000. However, the plan has been brought forward by a yeardue to good response level from private operators. The manufacturing facility will be funded as part of Volvo's plan to invest Rs 300 crore in its India operations over the next few years.

Volvo plans to introduce the 230 bhp B7R bus model. The bus will cost around Rs 27 lakh to Rs 30 lakh and the outer body and chassis will be manufactured completely at the company's plant in Hoskote. Volvo has identified several domestic companies to source components and parts for its buses since the plan is to indigenise over 50 per cent of the product within the first year.

Rigged up for distances of around 400 km to 500 km, the buses will be equipped with 135 degree reclining seats, central air-conditioning, chemical toilets, coffee dispensers and other facilities which are still novelty for the average Indian travellers. The B7R model which the company plans to introduce is already a success on European roads, Uppal added.

The introduction of the luxury inter-city buses will place Volvo in direct competition withTelco and Ashok Leyland that are also manufacturing 50-seater inter-city buses. While their prices are close to what Volvo is planning, neither offers facilities that the Swedish automaker promises.

The company is, at present, manufacturing heavy commercial vehicles. Volvo's FH 12 tractor-trailer entered the market in June this year. However, owing to the sluggish demand in core sectors like infrastructure, mining, cement and iron and steel, the sales have been limited to a few hundred.

The truck plant has been set up with a capacity of 4,000 trucks per annum. However, over the next few years, the company does not plan the have a capacity of more than a few hundred on account of the market condition.

Uppal is still optimistic, claiming that this time period will be enough for the company to make in-roads into the country's transport sector to sell the concept of multi-axle truck with capacities twice as high a what Indian roads are used to. The company plans to establish a large number of servicestations, he added. At present, only Bangalore, Delhi and Mumbai boast of service stations. By next year, Ahmedabad, Hyderabad and Nagpur will also be on the map for Volvo.

Volvo India has an equity base of $60 million which is likely to be extended to $80 million within the next two years.