The MoU was signed between the government and the BMW group in the presence of Chief Minister J Jayalalithaa at the secretariat.
BMW, a leading automobile manufacturer in the global market with an annual turnover of about Rs 2,19,240 crore (Rs 2192.40 billion), had been focusing on the premium segment in the international auto market.
The German group had selected a site in Mahindra World City in Maraimalainagar, near Chennai, to set up its assembly plant.
It held discussions with many state governments, including Tamil Nadu. After detailed evaluation of the infrastructural facilities and support package, BMW decided that Chennai was the ''best location'' for establishing its car assembly plant with an investment of about Rs 180 crore in five years, a statement said.
The MoU was signed by general managers Ronald Gentsch and Peter Kronschnabl, on behalf of BMW and Tamil Nadu industry secretary D Rajendran on behalf of the state government.
BMW senior vice president Klaus Berning told the Chief Minister that the company had decided to establish its car assembly unit in Chennai due to the ''favourable investment climate'' in the state.
Berning thanked Jayalalithaa for the infrastructural facilities and support package provided by her government to the BMW. He also thanked her for the ''fastest response'' ever seen by the company and the ''speed'' of the government in facilitating the investment by the group.
Jayalalithaa expressed happiness that the BMW management had finally chosen Chennai to establish its assembly plant after elaborate evaluation of various sites in different states of India.
''This bears ample testimony to the favourable and conducive investment climate prevalent in Tamil Nadu and the pro-active approach of the government under her leadership,'' the statement noted.
She also pointed out it was the ''perfect match'' of BMW's brand equity and Chennai's position as the destination of choice and this would be the ''harbinger for a flood of new investment proposals'' from Germany to Tamil Nadu.
Jayalalithaa claimed that Tamil Nadu had emerged as the destination of choice for investors and several independent studies had rated the investment climate in the state highly.
A recent study conducted on 'Economic Freedom for States of India 2005,' declared that Tamil Nadu topped the list of 20 states on the composite economic freedom index.
Another study had pointed out that the state had climbed from the fifth spot to the country's top place this year in terms of ease of doing business, she said adding there was ''no surprise'' that Tamil Nadu had become a ''major recipient'' of foreign investments.
Jayalalithaa expressed hope that the incentive package and facilitation provided by her government would ''significantly enable BMW to scale new heights.'' She exhorted the BMW group to bring a cluster of German auto component manufacturers to Chennai and make the facility here the hub for South East Asia.
The Chief Minister assured the BMW Group that the state government would extend continued support and cooperation to enable it grow from strength to strength.
Tamil Nadu Finance Minister C Ponnaiyan, Industries Minister Nayanar Nagenthran and Chief Secretary N Narayanan were also present on the occasion.
