ET reported that Indian operations of Japanese car giant Toyota is understood to have asked its parent to consider setting up of a diesel engine plant here, buoyed by the rapidly increasing demand for diesel vehicles.
According to sources, Toyota Kirloskar Motor, the Indian joint venture with the Kirloskar Group has put forward its proposal to set up a diesel engine plant in the country after the Budget for 2012-13, which spared diesel vehicles from additional taxes.
A source said that "With the demand for diesel cars in India rising very strongly, a request has been made to Toyota's Tokyo headquarter for a diesel engine plant in India. It is very important to have more localisation to meet the increased demand.”
The company has seen demand for its diesel cars rising significantly, especially on its latest two models sedan Etios and compact car Liva. In 2011, TKM sold 63,575 units of Etios and Liva, out of which 70% came from diesel variants.
The source added that "So far we have not heard anything as the company is still studying the proposal. However, we are hopeful of a positive decision. We cannot say anything further at this moment.”
A TKM spokesperson said that "We are going to assemble only gasoline engines, as of now there is no plan to manufacture or assemble diesel engines in India."
TKM is currently investing INR 500 crore to set up a petrol engine plant and expanding its transmissions capacity in Bangalore.
During Delhi Auto Expo in January this year, TKM had said it will consider setting up a diesel engine plant in the country after observing the government's policy decision on subsidy to diesel during the Budget in March.
Source - Economic Times