INDIA is soon to have its second make of luxury car. A few months after Tata group announced a tie-up with Mercedes-Benz, Hero Group, which already makes motorcycles and mopeds for BMW, is to produce the German car giant's luxury cars. Hero Group director Pankaj Munjal said a new company would be formed to make the BMW 3-Series, which would retail at a price between two million to 2.5 million rupees (about HK$465,000 to 570,000). Mr Munjal refused to divulge production details or how the new company's equity would be split between Hero and the German manufacturer. The BMW 3-series is expected to compete directly with the Mercedes 220E produced by Tata Engineering and Locomotive Company (TELCO). TELCO claimed to be ready with the 220E, and said it would open bookings five days before the Diwali festival begins on October 17, which Hindus believe is an auspicious day. The 220E is expected to be priced at about two million rupees. The Hero-BMW car plant is expected to be built in Greater Noida, Uttar Pradesh, on government land provided at concessional rates. BMW also visited Madras and Pune and had wide-ranging discussions with other car giants, including Bajaj Auto, the world's largest scooter manufacturer. Visits by BMW officials to motor manufacturers in other parts of India gave an impression that the company was keen to find production bases for other models. BMW has decided to launch accessories such as crash helmets, jackets and wrist watches in India, but is yet to finalise a tie-up for these. Its 650 cc motorcycles will be imported by the Hero Group in part-assembled units and put together at the company's plant. The company expects to sell 500 such motorcycles at 500,000 rupees each. Hero's joint venture with BMW is the latest of a string of passenger car deals with foreign firms which have revolutionised the industry in India. These include Maruti Udyog's link with Suzuki, and joint ventures between Premier Automobiles with Peugeot and Fiat; DCM Group and Daewoo; Hindustan Motors with General Motors and Opel; Mahindra & Mahindra with Ford Motors and Chrysler; the Hinduja group with Hyundai; and Sipani Automobiles with Rover.