Construction of the factory in India's fourth-largest city is to begin in the near future, with production of 70,000 vehicles per year foreseen starting in 2010, a statement said.
Daimler operates in India via a joint venture formed recently with the Hero Group, known as Daimler Hero Commercial Vehicles (DHCV). The venture is to receive some €700 million in funds by 2013, from both companies and foreign investors, Daimler said.
It is trying to catch up with competitors that have already established a presence in the promising Indian market.
The world's leading constructor of commercial vehicles is also looking to attain a dominant position in the Brazilian, Chinese and Russian markets.