New Delhi: The Indian auto industry has welcomed Tata Motors' decision to set up Nano small car plant in Gujarat, saying the deal has reinforced the confidence of the industry.

"The Gujarat deal has reinforced the confidence that the Indian automobile sector is poised for steady growth and is seen as the next global destination for international automobile manufacturers," Society of Indian Automobile Manufacturers (SIAM) Director General Dilip Chenoy said Tuesday.

"It may emerge as a major factor that could change the current negative sentiment in the automotive industry. Almost all auto manufacturers are strengthening their manufacturing base that will further contribute to the strong growth of the auto industry in India," Chenoy said in a statement.

It also brings out clearly that India as a country has the ability to withstand any socio-economic threat and would further help in attracting foreign investments in India, he added.

Confederation of Indian Industries (CII) Director General Chandrajit Banerjee said "Gujarat was one of the most investor-friendly states with an impeccable record of industrial relations."

"The CII is working closely with the government of Gujarat to promote further industrialisation of the state through the 'Vibrant Gujarat' initiative, by highlighting the superior infrastructure, industrial climate and efficient governance in the state,"Banerjee said in a statement.

"CII is delighted that Nano has found a home in such a state,” Banerjee added.