In a move to step up its manufacturing in India, Maruti Suzuki - India's largest carmaker - has decided to develop twin facilities in Gujarat. The company's Japanese parent Suzuki Motor Corporation (SMC) has plans to concentrate on Asian markets following the recent closure of its US operations. Suzuki withdrew from the US market in November last year.

Maruti, the largest subsidiary of Japanese carmaker Suzuki, has charted out its future production model on the lines of Haryana operations, where it operates five plants from two separate locations in Gurgaon and Manesar.

To finalise its Gujarat plans, SMC chairman Osamu Suzuki is making an unscheduled trip to India on January 24th and 25th. Maruti is now directly acquiring a 480-acre plot at Ughroz and Ukarade villages in Gujarat from farmers. This is in addition to the 700 acres allotted to Maruti Suzuki for a manufacturing facility in Mehsana by the Gujarat government.

The company plans to invest around Rs. 40 billion (US$ 745.3 million) in Gujarat in the first phase that would go into acquiring the land and constructing the proposed plant, which will have an initial annual capacity of 250,000 cars. The company has planned new models for India along with a strategy to export more cars from the modern Manesar factory and the upcoming Gujarat facility.

"We are looking for a second location and the land is being acquired currently. We are saturated in Haryana with no scope of expansion. We would have a similar two-location model in Gujarat that would be developed and expanded in accordance with market demand," Maruti Suzuki chairman R.C. Bhargava had recently told reporters.

According to a top executive, Maruti has already started the process of acquiring additional land as it has learnt a few lessons from the increased land prices at its Manesar locations. A court order has recently asked the company to pay many times the 2.0 million per acre it shelled out to acquire around 600 acres in 2005. "To avoid further complexities, the company has decided to acquire more land on its own. The acquisition would be done directly from land owners keeping in mind its future needs. Land price have already started moving north in Gujarat," the executive added.

Purchase of new plots of lands is in accordance with the Maruti management's long-term agenda to expand its Indian manufacturing facilities, which will help Maruti meet future market demand in Asia. These new plants will be located around 100 km from Ahmedabad, and will be within a 300-km radius of the Mundra port, which has been developed by Maruti keeping in view its long-term export plans.