SANAND, India—Tata Motors Ltd. has agreed to buy Ford Motor Co.’s assembly plant here for $91.5 million.

Specifically, the deal is between Tata’s EV subsidiary, Tata Passenger Electric Mobility Ltd., and Ford’s India subsidiary, Ford India Private Ltd. The deal covers land, assets and all eligible employees.

“With our manufacturing capacity nearing saturation, this acquisition is timely and a win-win for all stakeholders,” Tata Motors said in a statement. Tata expects the plant to enable the company to produce an additional 300,000 units per year.

Ford had less than 2 percent of the Indian passenger vehicle market when it stopped production in the country last year, having struggled for more than two decades to generate profits.

Ford will continue to operate a powertrain manufacturing facility on the campus by leasing back the land and buildings from Tata.