In order to cash in on the growing demand for diesel cars in India and to become one of the major car manufacturers, Nissan Motor India is setting up a diesel engine plant within its manufacturing plant at Oragadam near Chennai, Sunil Rekhi, chief financial officer of Nissan Motor India, said on Thursday.

Nissan will also launch the diesel version of its just launched ?Sunny? sedan at the forthcoming Auto Expo 2012 in January at Delhi, he added.

Rekhi, who took part in the MoU signing pact with State Bank of India for both vehicle and dealer financing, said, ?We are committed to India on a long-term basis and we want to localise our products to the maximum level. As part of this exercise, the company is setting up a diesel engine plant with Renault India. It is a joint investments plant and is flexible enough to produce both petrol and diesel versions.? He said that the company can produce 200,000 engines initially, which will be scaled up to 400,000 units going forward.

?The investment into this engine plant will be a few hundred crores and is part of our total investments of R4,500 crore into Indian operations. We seek to drive all our diesel cars in India with ?Made-in-India? diesel engines and we hope to start with Sunny from next year onwards,? he added. the company will start the Sunny diesel version with imported engine, however, it will be localised immediately.

?It is a engine plant and the plant can make both petrol and diesel engines for both Renault and Nissan in India. We see the engine plant to become a sourcing hub for our global markets going forward. We have qualified vendors to supply parts for this engine plant in India,? he said.

At present Nissan Micra diesel cars runs on imported engines. ?In the near future, all the diesel vehicles will use locally made engines. It gives us enough competitive edge to take on others and help us to stay competitive longer,? he added. The company hopes to more than double domestic sales in India this year even when the the market is going through difficult period owing to rising interests rate, inflation and Re/dollar parity. ?We still hope to sell around 30,000 units (80% of our original target of 40,000 units) in the domestic market in the current financial year,? Rekhi said.

Earlier, the company has signed a MoU with SBI to finance customers and dealers. ?We see the move will help us penetrate deeper into the markets as SBI has branches at every nook and corner. SBI offers 100 basis points lower than other banks with lot of benefits to customers as well as dealers,? he said and added that Nissan had signed MoUs with HDFC Bank, ICICI Bank and Kotak.