Honda Motor is planning to build a diesel engine manufacturing plant in India and hopes to start operations in 2013, corporate sources said at the weekend.

Amid growing demand for diesel cars in India, Honda plans to invest about JPY30bn to build the engine plant within the compound of its existing production site in the northwestern state of Rajasthan, the sources told Kyodo News.

Honda envisions installing diesel engines of around 1,500 cc in its compact City and Brio models.

Diesel-powered cars are particularly popular in India, where diesel fuel costs less than petrol because of government price controls.

Honda, does not yet sell diesels in India, has recently been struggling with sluggish sales in the fast-growing market. Rivals like Maruti Suzuki have put greater emphasis on offering diesels.

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