"We want to move quickly in terms of volume," VW's president in India Jörg Müller said.
The group currently has less than one percent of the Indian market. VW plans to move up the launch of its first wholly-owned Indian factory by six months to early 2009.
It will invest €580 million ($902 million) at a site in Pune, near the financial capital Mumbai, to increase output of the Fabia car built by VW's Skoda unit to 50,000 vehicles per year.
In 2011, the plant is expected to raise that figure to 110,000. VW also wants to launch its planned low-cost car "up" in India, which has become a priority market for boss Martin Winterkorn.
The Indian auto market is currently dominated by Asian carmakers Suzuki and Hyundai.