The capacity is to be added in 18 months from the date of acquisition of land for setting up the plant and obtaining other statutory approvals.

The auto major said that upon commencement of operations, the manufacturing facility will initially have the capacity to produce 2,500 buses per year. The company intends to gradually expand this capacity to accommodate up to 5,000 vehicles per year over the next decade as the demand for electric and other types of buses is expected to grow substantially over the next few years. Once operational, this will be the seventh vehicle plant of Ashok Leyland in the country, it added.

Under this partnership, Ashok Leyland will predominantly concentrate on the production of electric buses, with the flexibility to also assemble other vehicles powered by currently available fuels as well as emerging alternative fuels, to cater to the growing market demand.

Dheeraj Hinduja, executive chairman, Ashok Leyland said, “The signing of this MoU with the Government of Uttar Pradesh to establish a manufacturing plant in the state reaffirms our commitment to shaping the future of the commercial vehicle industry. We are confident that this new facility will contribute positively to our shared objectives of generating employment opportunities and promoting sustainable mobility in India.”

Shenu Agarwal, MD & CEO, Ashok Leyland stated, “Ashok Leyland's mission to achieve Net Zero by year 2048 is one of the triggers to set up this plant in Uttar Pradesh. Contingent on market adoption and demand of alternative fuel vehicles in the state, Ashok Leyland intends to invest up to Rs 1,000 crore in this new facility over the next few years.”

As part of the MoU, the UP Government and Ashok Leyland will engage in discussions to develop more attractive policies aimed at accelerating the adoption of electric and green fuel trucks and buses. These policies will target both the public and private sectors, including private schools and private transportation, as part of their efforts to achieve the state's net-zero objectives, it added.

Ashok Leyland is engaged in manufacture and sale of a wide range of commercial vehicles. The company also manufactures engines for industrial and marine applications, forgings and castings.

The company reported net profit of Rs 576 crore in Q1 FY24, up by more than eight times as compared with a PAT of Rs 68 crore in the same period last year. Revenue for the quarter stood at Rs 8,189 crore as against Rs 7,223 crore in Q1 FY23, up 13.4% YoY.