MUMBAI: Germany's Daimler AG will invest 4.25 billion rupees ($69 million) to set up a factory to make buses in India, the company said on Thursday, as it looks to expand beyond the high-end buses that it currently sells in the local market.

The plant, which is to be constructed within the company's existing facility near southern Chennai city where it makes trucks, will have an initial capacity of 1,500 units.

The capacity can be expanded to 4,000 buses, it said. The plant will manufacture and assemble buses under the Mercedes-Benz and BharatBenz brands and will be completed by the second quarter of 2015, Daimler said in a statement.