Budget 2012-13: Diesel engine plant at Gurgaon decision in 2 mths: Maruti

Hard pressed to increase the production of diesel cars, Maruti Suzuki India may decide within two months on setting up a diesel engine unit at its Gurgaon plant, a top company official said.

"After the Budget spared diesel tax, we really need to take a quick decision on how to increase the production of diesel cars. At the moment we are constrained by limited supply of the engines.

"So we need to make diesel engines on our own and we need to take a decision within a month or two," Maruti Suzuki India Managing Director Shinzo Nakanishi told PTI.

The company, which sources diesel engines from Suzuki Powertrain India Ltd (SPIL) and Fiat India, had put on hold investments on the plant awaiting clarity over tax on diesel and a clear policy on its pricing.

Asked what are the options before the company, Nakanishi said: "We already have the engine manufacturing infrastructure at Gurgaon, so if we have to manufacture diesel on our own we may do it there. The only question is whether we compromise on petrol for diesel... these are decisions we need to take quickly."

MSI manufactures all the petrol engines at its Gurgaon plant and has an annual capacity of over eight lakh units.

With demand for diesel cars increasing SPIL is increasing its diesel engine capacity to 3 lakh units per annum from 2.4 lakh units. Moreover, MSI will also get one lakh diesel engines a year from Fiat, which has already started since January this year.

Demand for diesel cars have soared in India as petrol is priced much higher than the government subsidised diesel.