Armin Bruck, managing director of Siemens India, says the 200-megawatt (MW) facility will be commissioned in 2012, and may eventually be expanded to around 500MW.

Bruck says the factory’s location has been narrowed down to “two or three” sites in the states of Tamil Nadu and Gujarat. “We’re talking with these states and should be able to take a final decision within a few weeks,” he says.

Oliver Lönker, spokesman for Siemens Wind, tells Recharge nearly all of the facility’s initial production will be targeted at India’s booming domestic market. However, he does not rule out the possibility of eventually leveraging India’s low labour costs to use the country as an export hub.

Siemens produced nacelles and blades for turbines with a combined capacity of 2.3 gigawatts (GW) in 2009, according to Lönker. All its output currently comes from its flagship facilities in Denmark and a blade factory in Iowa. By the end of 2010 work will be finished at new factories going up in Kansas and Shanghai.

Despite the Indian government’s incoherent policy on wind and other renewables, developers increasingly believe the country presents a stable market for long-term growth. Due to its massively growing energy requirements, over the next seven years India must add 150GW of generation capacity – equivalent to Germany’s total capacity.

Siemens' move could pose a threat to Suzlon, which has built itself into the world’s third-largest turbine maker from its base in Pune, Maharashtra. Suzlon currently commands around 10% of the global turbine market, and sells more than half the turbines erected in India.

Around a dozen foreign turbine makers have joint ventures or some form of production facility in India, including Vestas, Enercon and Gamesa.