India's biggest carmaker Maruti to set up manufacturing plant in north

·1-min read
FILE PHOTO: Corporate office of Maruti Suzuki India Limited is pictured in New Delhi

By Sudarshan Varadhan

NEW DELHI (Reuters) - India's biggest carmaker, Maruti Suzuki, will build a manufacturing plant that can produce up to 250,000 cars a year on an 800-acre site in northern Haryana state, it said on Friday.

The plant is expected to produce its first car by 2025, and the company would invest over 110 billion Indian rupees ($1.42 billion) in the first phase of the project, it said.

The investment by Maruti, which accounts for nearly half the cars produced in India, marks the first major planned investment by a carmaker in years.

The move comes at a time when most Indian carmakers are battling a slump in sales due to subdued demand in turn due to rising inflation and supply issues, including a global semiconductor shortage.

"The site will have space for capacity expansion to include more manufacturing plants in the future," Maruti said in an exchange filing on Friday.

Maruti, known for selling affordable, small cars in a price-sensitive market, did not say what type of cars it intends to manufacture.

Carmakers across the globe have resorted to hiking prices in a bid to deal with steep raw material and shipping costs, which are squeezing profit margins at companies looking to recover from the pandemic.

The company has been lobbying the Indian government against rules requiring cars to have six airbags, saying it would make small cars more expensive and deter buyers.

(Reporting by Sudarshan Varadhan; Editing by Nick Macfie)

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