Maruti Suzuki is to invest nearly US$1.3bn to set up a new plant, likely in the western Gujarat state, its chairman has told the Reuters news agency.
Gujarat has already been successful in attracting Ford and PSA Peugeot Citroen to build plants there in the past few months.
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Maruti Suzuki wants to establish a huge, 1m vehicle-a-year factory and expects to make a decision by the end of next month.
Maruti, 54.2% owned by Suzuki, takes 50% of the Indian new car market but is facing intensifying competition from Hyundai, the second-largest car maker in India, as well as domestic rivals.
The company has also been hit recently by strikes at its Manesar plant in northern Haryana state which hurt the production of the popular Swift model, raising doubts about the firm’s ability to maintain sales growth.
