The move comes even as GM's due diligence for the takeover of Daewoo Motors' Surajpur plant is expected to be 'wrapped up within the next 60 days.'

Company officials said only after this is over will a final decision be taken on the location of the small car project. The company plans to double capacity at Halol from 33,000 units to 60,000 units per year.

Aditya Vij, managing director and president of the company, told Business Standard that GM has enough land in Halol which can be used for new facilities. The small car that GM will be launching in India will be "a market-driven vehicle and will also be chosen for economy and pricing", said Vij.

"We really need a small car to get volume and efforts are on to expedite its launch," said Vij.

The success of Chevrolet Spark in China and Korea has made it one of the favoured launch options. It could be unleashed under a different brand name in India, though. "Though we may be entering the Indian small car business as the fourth or fifth player, we believe there is enough space for some more brands," Vij said.

What swings the case in favour of Halol, company officials said, is its proximity to the Mundra port.

Vij said with the improved road network in Gujarat and better port infrastructure the company wants to rethink on Mundra as a base for exports. "Over two years back, we had worked on this idea but at that time, the port was not really ready. But now that P&O Ports has taken over the container terminal, we assume that handling containers of cars will not be difficult in Mundra."

Sanjay Gupta, chief executive officer of Adani Group, said on Wednesday, "With a draft of 15 metres in the channel and 17 metres alongside the container berth, the Mundra port is ready to cater to the needs of automobile manufacturers in India and P&O Ports has all the latest facilities to handle containers of vehicles. Mundra port, which is also going to have a SEZ soon, has more than adequate land with it for parking such huge consignments and we will be delighted to handle cargo for GM India."

Two models in two years

General Motors India, which is targeting a 10 percent share of the country's passenger car market, will launch at least two new models in next two years in India under the Chevrolet and Opel badges.