India's Maruti to invest $1.3bn in new plant

NEW DELHI: Maruti Suzuki , India's largest car maker, will invest nearly $1.3 billion to set up a new plant, likely in the western Gujarat state, its chairman told Reuters on Wednesday.

Global automakers are flocking to the business-friendly Gujarat state recently, with Ford Motor and PSA Peugeot Citroen both announcing investment plans in the state in the past few months.

"On one plant for a million capacity, which will be set up over a number of years, the investment will be close to $1.3 billion," R.C. Bhargava said by phone.

He said the company was looking at western Gujarat state as a potential location for the plant, but a final decision will be made only by end-October.

Maruti, 54.2 percent owned by Japan's Suzuki Motor , is facing intensifying competition from the likes of South Korea's Hyundai Motors , the second-largest car maker in India, as well as domestic rivals.

Besides, an ongoing strike at its Manesar plant in northern Haryana state has hurt the production of its popular Swift model, raising doubts about the firm's ability to maintain sales growth.

Suzuki, which controls almost half the Indian car market through its majority stake in Maruti, had said last week its chairman and CEO, Osamu Suzuki, visited Gujarat earlier this month.

Copyright Reuters, 2011