To bridge the demand-supply gap for its passenger cars, Maruti Suzuki India on Thursday said it was planning to invest Rs.1,700 crore to set up a third production unit at its Manesar facility with an installed capacity of 2.5 lakh units.

“We are preparing a project report for the third unit in Manesar, which will come up for discussion before the board. The unit is proposed to have a capacity of 2.5 lakh units annually,” Chairman R. C. Bhargava told journalists at the Society of Indian Automobile Manufacturers (SIAM) summit here.

Though Mr. Bhargava gave no time-frame for setting up the plant, he said the project report was expected to be completed soon. On investment, he said it would be in a similar range of the second unit which is now being set up at Manesar.

The Manesar plant has an annual production capacity of 3-lakh units, while the Gurgaon plant produces 3-lakh units annually.

Recently MSIL Managing Director and CEO Shinzo Nakanishi had said that the Indian car market was likely to double to 50-lakh units by 2015 and the company needed to be prepared to meet the growing demand in order to maintain its leadership position. According to SIAM, the market leader sold over 2.82-lakh cars during the April-July period this year, representing a 47.68 per cent share in the overall 5.92-lakh units market.

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