India’s largest vehicle maker Tata Motors said on Monday that it had signed a contract with Myanmar [Burma] Automobile and Diesel Industries to set up a heavy truck plant in the military-ruled country.

The new plant would be set up at Magwe, nearly 480 kilometres from Rangoon, and will be operational in the last quarter of the financial year ending March 2011, it said in a statement.

Burma, which has been ruled by the military since 1962, is under economic sanctions by the United States and Europe because of its human rights record and long-running detention of pro-democracy leader Aung San Suu Kyi.

But the impact of the sanctions has been weakened as neighbours such as China, India and Thailand invest billions of dollars, particularly in its oil and gas industry.

Tata Motors, which owns the formerly British brands Jaguar and LandRover, said the plant would have a capacity of 1,000 vehicles per year, which could be expanded to 5,000 vehicles.

No financial details were given, but the plant will be funded by a line of credit from the government of India.

India has since the early 1990s upped investment in Southeast Asian countries as part of its ‘Look East’ policy, which aims to counter China’s growing influence in the region.

Earlier this month it announced that it was investing $US1.35 billion in gas projects in Burma; $US1.1 billion on rights to develop two gas field blocks and $US250 million on a connecting pipeline, India’s energy ministry said in a statement.