Mumbai, Dec. 21: Mahindra & Mahindra’s tractor joint venture in China will invest $40 million.

Mahindra Yueda (Yancheng) Tractor Company — the joint venture with Yueda Group — will set up an engine manufacturing unit along with a research and development centre and modernise the facilities of its Yancheng plant.

About half of the total investment will be in engines.

The announcement came close on the heels of a meeting among Anand Mahindra, vice-chairman and managing director of the Mahindra group, Cao Youhu, vice-mayor of Yancheng City, and Chen Yunhua, chairman of Yueda Group. M&M had acquired a majority stake in Yancheng Tractors last year.

Anjanikumar Choudhari, president (farm equipment) of M&M, said, “The investments in the R&D centre, engine plant and modernisation of tractor manufacturing facilities will help us to produce tractors with improved performance. These measures, along with our efforts to build a better sales and service infrastructure, will help Mahindra Yueda improve its tractor sales in China and in the exports market.’’

The tractor market in India is growing at an impressive 15 per cent rate, but the Chinese market is expanding at a much faster pace.

Yueda Group, having a turnover of $7.3 billion, has a presence in automobiles, tractors, coal, mining, infrastructure, real estate, textiles, garments, hotels and supermarkets.

M&M — the largest tractor maker in the world — is focussing on the overseas markets. M&M’s 100 per cent subsidiary Mahindra USA has three assembly plants.

The Mahindras also plan to make planes and allied aerospace components to service the global market.

Last week, the Rs 13,000-crore company announced that it had picked up a 75.1 per cent stake in two Australian aerospace firms for Rs 175 crore.