The $106-billion Toyota Motors holds 76 per cent equity in the joint venture company - Toyota Kirloskar Motors Pvt Ltd. The balance is held by the Kirloskar group, which has operations in Pune and Bangalore. Toyota Motor has put in an application to the government seeking an amendment of the royalty clause and to charge a lumpsum fee, souces said.

The case is coming up for discussion in the Foreign Investment Promotion Board (FIPB) meeting on Saturday. Sources said Toyota in its application filed last year had sought for royalty payment of 5 per cent on domestic sales. Besides this, the company has now sought 6 per cent royalty on exports in this application.

The case would be considered in the backdrop of the percentage of royalty fees which are permitted for foreign companies,sources added. In the first phase, the investment in the project is $170 million.

In phase I of the project, Toyota will focus on the production of a family-type multi-purpose vehicle, specially designed for India. The plant has an annual capacity of 50,000 units. The first vehicle is expected to roll out towards the end of 1999.

The initial local content for the model will be over 50 per cent and would be gradually increased. The plant is located in Bidadi, near Bangalore in Karnataka. The capacity will be further expanded later. The project will initially employ about 1,000 people with a further downstream employment potential for dealers and vendors. Toyota intends to develop the plant to become a major part of Toyota's global strategy. The joint venture combines the resources and technology of Toyota and the expertise of Kirloskar, which is an electrical and mechanical equipment group.