NEW DELHI (AP) _ India's largest automaker, Tata Motors Ltd., said Thursday it plans set up a plant in communist-ruled West Bengal state to manufacture a family car that will cost little more than $2,000 US.

The plant will be set up with an investment of 10 billion rupees ($220 million), and is expected to start production in two years, said Ratan Tata, the company's chairman.

A prototype of the five-seater model to be made at the West Bengal plant is undergoing tests at a Tata facility in the western Indian city of Pune, Tata said, adding that the company aims to keep the car's price below 100,000 rupees ($2,200).

The project will create about new 10,000 jobs at the plant and vendor chains, he said.

Tata's investment is significant for West Bengal, which the private sector has largely avoided since the communists came to power in the late 1970s.

While the Left Front _ a coalition of parties led by the Communist Party of India (Marxist) _ has been successful in its efforts to reduce rural poverty in West Bengal, urban unemployment has increased. Many businesses won't invest in the state, fearing labour unrest and problems in dealing with the communist administration.

But Tata, one of India's most respected businessmen, expressed confidence that the state was the right place to establish a new plant.

``We have come to believe that West Bengal is one of the most investor-friendly states,'' he said. ``I think someone has to turn this belief into a reality.''