Utility vehicle specialist Mahindra & Mahindra expects double-digit sales growth for the fiscal year to March and will raise its investment in a new plant to double capacity, a senior official said on Wednesday.

Mahindra, which earlier this week said it would defer a planned investment in a manufacturing venture with Renault and Nissan Motor, will invest up to INR40bn ($US1.02bn) in the new plant, according to a Reuters report.

Pawan Goenka, president of Mahindra's automotive unit, told the news agency it has acquired land in Chakan in western India, and the plant, with a capacity of 330,000 units, will begin operations in two years to make passenger and commercial vehicles.

"We have enough capacity in our existing plants for our immediate needs, and we couldn't have done everything we required with the joint venture," he told Reuters after unveiling a bio-diesel variant of its Scorpio sport utility.

"So it made more sense for us in terms of capex to start just one new plant rather than two," he added.

The additional capacity will take Mahindra's total capacity to more than 600,000 vehicles a year. It aims to double domestic sales and quadruple exports by 2010, the report said.

Mahindra, which has a separate venture with Renault to make the no-frills Logan sedan in India, also told Reuters it expected sales for the full-year to March to grow strongly.

"We are confident we'll end the year with double-digit growth, and that FY09 will be positive as well," said sales chief Rajesh Jejurikar.