Toyota Motors, the auto giant from Japan, has been thinking along the lines of setting up a plant for diesel engines in India. However, this decision is going to be finalized only after the company examines the policy that the government is going to take on offering subsidy to this fossil fuel, in its upcoming budget, that will be declared in March 2012. The Japanese car maker is presently collaborating with Kirloskar Group and at present, is investing Rs.500 crore for setting up a plant to manufacture petrol engines and simultaneously strengthening its Bengaluru based transmission capability. A senior authority within the company has said that the feasibility of setting up a diesel engine plant in India can only be ascertained only after the company studies the Union Budget of 2012.
It has also been mentioned that the auto maker is going to wait till some levels of precision are witnessed regarding the continuation of financial benefits being provided to the cost of diesel. Toyota Motors has been correctly able to gauge the increasing demand of diesel cars amongst Indian consumers. It has been amply reflected by the sales figures that the two diesel cars that Toyota has offered to the Indian auto market, has achieved. Its twins, the Etios sedan and the hatchback, the Etios Liva, have combined to registered sales of 63,575 units; 70% of these sales figures have been registered by the diesel variants.
Toyota is not the only auto maker that is waiting for a clear picture post the Union Budget of 2012. Maruti Suzuki, the largest car manufacturer in India, is also waiting for the same before it takes decisions for further investments in the segment of diesel engines. In fact, the CEO & MD, Maruti Suzuki, has made it quite clear that the auto maker is not going to make any further investments till it receives clarity on the government policies. A company would be required to invest around Rs.1,000 crore for setting up a plant for manufacturing diesel engines, having an annual capacity of 100,000 units. Hence, it is very clear that unless the companies receive some clarity with regards to the governmental policies, they will be reluctant to invest such an enormous amount.