The world's largest car maker Toyota Motor Corp is considering building a new factory in India to meet growing demand for its vehicles in the country.
It already has two factories in Karnataka with a cumulative capacity of 210,000 units per annum.
The new factory may be set up near Hosur in Tamil Nadu and sources said it would be operational around 2016.
Toyota had said last week that it will invest at least R900 crore this year to increase capacity at its Bangalore factory by 100,000 units to 310,000 units by March 2013.
The company's bread and butter Innova utility vehicle has seen historic sales this year benefitting from the shift in consumer preference from petrol to diesel vehicles.
So far this year, sales have surged 34% to over 73,000 units in the first five months of this fiscal year.
Its cheaper Etios sedan and Liva hatch back have however seen below par sales.
When contacted a company spokesperson said nothing has been decided yet but refused to deny the plans.
India is also the hub for manufacturing the Etios, the company's cheapest car globally, and it would be exported in future.
It also has an engine factory near its factories in Karnataka.