Bangalore, Jul 7 (IANS): Japanese auto major Toyota Motor Corporation (TMC) is investing an additional Rs.500 crore (Rs.5 billion) in India to set up an engine plant for its upcoming compact car Etios, a top company official said Tuesday.

"We are setting up the second engine plant with an installed capacity of 100,000 units per annum for our Etios compact car, which will enter the Indian market in December," Toyota-Kirloskar Motor Ltd (TKML) managing director Hiroshi Nakagawa told reporters here.

The new plant will be set up by Toyota Kirloskar Auto Parts Ltd (TKAP), a joint subsidiary of TMC, Toyota Industries, Japan and the Pune-based Kirloskar group.

TKAP has already invested Rs.500 crore in setting up a transmissions plant and an engine plant for exporting to its overseas manufacturing facilities in Asia, Europe and Latin America.

The Toyota group has 90 percent stake in TKAP, while Kirloskars hold the remaining 10 percent equity.

Till Etios production is scaled to 100,000 units per annum from the initial 70,000 units, the remaining 30,000 engines will be exported to Toyota's auto plants in Thailand and Argentina.

"Though Etios is specially designed for the Indian market, it will have an imported engine from Japan till engines from the TKAP third plant roll out," Nakagawa said.

TKML has invested Rs.1,700 crore in setting up its second plant to roll out Etios, with an installed capacity of 100,000 units per annum.

TKAP's third plant for Etios engines will be commissioned in the next 24-30 months.

Simultaneously, the capacity of the first plant, which manufactures 170,000 manual transmissions (gear box) per annum for its Fortuner sports utility vehicle (SUV), will be expanded to 240,000 units per annum by 2012.

All plants are located in the Bidadi industrial hub, about 30 km from Bangalore.

TKML also made a cumulative investment of Rs.3,200 crore in its first plant over the decade to manufacture Qualis and subsequently Innova multi-utility vehicles (MUV), Corolla sedan and the Fortuner.

The global auto firm also imports in completely built unit (CBU) its luxury sedan Camry, Land Cruiser Prado and hybrid vehicle Prius for the Indian market.