MUMBAI: The Indian joint venture of Italy's Fiat and India's Tata Motors plans to raise total investment to $1 billion to expand a unit for cars and engines in western India, the firms said on Monday.
Fiat India Automobiles, the equal joint venture, will spend 23.41 billion rupees ($581 million) to double output to 200,000 cars in four years to meet rising demand in India and for exports. It will also expand engines and transmissions output to 300,000 units from 200,000 and also boost parts and accessories in four years.
Tata, India's No. 3 car maker, and Fiat announced the joint venture in July 2006. The additional spending will take total investment at the Ranjangaon facility in western Maharashtra state to about $1 billion, the firms said in a statement.
Tata and Fiat will each put in 6.5 billion rupees and remainder will be funded through debt, the joint venture's chief executive, Rajeev Kapoor, said. "We have to capture the export market," he said, adding that Fiat aims to export 30,000 cars by 2010. India's top car maker, Maruti Suzuki India, 54.2 percent owned by Suzuki Motor Corp, and the Indian unit of South Korea's Hyundai Motor Co are tapping low cost India to make it a small car export hub.
Fiat currently makes the Palio hatchback at the plant and has finalised plans to start producing the Linea sedan and the Grande Punto. Tata Motors will also use the plant to make some of its models from 2009, said Rajiv Dube, president of its passenger cars division.
He declined to name the models but said Tata, which will launch the world's cheapest car, Nano, at 100,000 rupees later this year, would not be built at the plant. Tata also makes the Indica hatchback, Indigo sedan, and Sumo and Safari utility vehicles. Rising incomes and new models are boosting car sales in India where less than 10 people in every 1,000 own a car compared to 300-500 in western countries.
Annual passenger vehicle sales are forecast to double to 2 million units by 2010, prompting Maruti to increase capacity to 960,000 cars by 2009. Nissan and Renault are setting up operations in India, while General Motors and Ford are expanding capacity in the country.
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