Suzuki Motor plans to invest about JPY20bn (US$215m) in a new car factory in India, aiming to upgrade its production facilities in the face of growing competition, though this will not expand capacity.

Suzuki, which controls about half the Indian car market through Maruti Suzuki India, said late on Saturday that the new facility would come on-line as early as 2011 and have an annual output capacity of about 250,000 cars.

The plant would expand its existing Manesar facility in the state of Haryana, about 50km (30 miles) from New Dehli.

The investment would not alter Suzuki’s annual production capacity of about 1m cars in the country because it plans to shift about 250,000 units of capacity from its ageing Gurgaon facility to Manesar.

Suzuki chairman Osamu Suzuki told a briefing in Japan on Saturday that the investment would likely come to about JPY20bn, a public relations official told Reuters.

Maruti Suzuki said the existing Gurgaon Plant I was constructed in the early 1970s and had been refurbished and modified before Maruti Udyog began production in 1983.

“The building is almost 40 years old, and the building and equipment are depreciated to a large extent and, therefore, it is necessary to reconstruct the building and modernise the production facilities. But since the land in the Maruti campus in Gurgaon has been fully utilised, and there is no space available for the expansion of the plant, it was decided that facilities from Gurgaon should be added and shifted to Manesar in a phased manner,” the automaker said in a statement.

The Gurgaon plant would be gradually changed to a base for engine assembly and machining while automobile assembly would be concentrated at Manesar, the statement added.

“As the shifting of production facilities will result in increase of production volume at Manesar plant, we have requested the Haryana government for further support so that the railway siding [there] can be completed as early as possible,” Maruti added.

The automaker is bracing for tougher competition in India.

Tata Motors’ Nano, the world’s cheapest car, hit the roads in July while Toyota, Ford, General Motors and Volkswagen are all set to launch small cars in India next year.