"The setting up of the smelter is a major step in our vision to create one million tonnes aluminium capacity to meet the growing demand in India," Vedanta Resources Chief Executive Officer Anil Agarwal told reporters in Mumbai.

"We have already brought in foreign direct investment (FDI) worth 1.5 billion dollars to fund our existing projects in India," he added.

He said the proposed smelter project will produce 500,000 tonnes aluminium per year and on completion will occupy the number one position as aluminium manufacturer in India.

The company already has a capacity of 380,000 tonnes in two plants in the country.

This is a part of Vedanta's Rs 15,000 crore ongoing investments in the Indian metal and mining sectors.

Vedanta Plc is owned 54 percent by Bahamas, registered company of Agarwals. It has already spent Rs 9,600 crore to establish a new aluminium unit and increase capacities of its aluminium, copper, zinc and lead plants in India. A steel plant in Orissa is also being considered by the company.

The new project in the eastern state, which also has in its ambit a power plant of 1,000 MW, will be completed in two phases lasting up to five years, Agarwal said.

Vedanta Plc is the parent firm of three aluminium manufacturing plants including Sterlite Industries and Hindustan Zinc Limited in India and has an integrated copper smelting capacity of 250,000 tonnes in Zambia.

In India, Vedanta plans to increase its present aluminium output from 140,000 tonnes to 400,000 tonnes per annum, copper production capacity from 180,000 tonnes to 300,000 tonnes and zinc smelter from 230,000 tonnes to 400,000 tonnes, according to Agarwal.