The world's biggest car maker wants the plant to start with a capacity of 80 000-120 000 vehicles a year, which could grow to around 200 000 over time, said one of the people who has direct knowledge of the plans.

The plant's proposed initial capacity will expand Toyota's existing manufacturing capacity in India by as much as 30% from 400 000 units currently.

Toyota has also begun the development of a new sport utility vehicle (SUV) for the Indian market that will be launched in early 2026 and be an anchor product for the new factory, said the person and a third source briefed on the company's plans.

The sources for the exclusive report declined to be identified as the automaker has not disclosed the expansion plans.

A representative for Toyota's India unit declined to comment.

Toyota's India sales have soared owing to a global partnership with Suzuki under which the two Japanese car makers take some vehicles originally developed by their partner and then tweak and sell them under their own brands to complete their product line-up.

Cars originally from Maruti Suzuki's stable such as the Glanza hatchback and Urban Cruiser Hyryder SUV now account for 40% of Toyota's India sales.

About two-thirds of Toyota's current production capacity is used by Maruti Suzuki to build vehicles for both car makers as part of their partnership.

Toyota, known for its Fortuner SUV and Camry hybrid in India, told Reuters earlier in September that it expected record domestic sales in 2023.

The Japanese car maker is now aiming to have production capacity of 500 000 vehicles a year before the end of the decade, including the car models that it will supply to Suzuki, said two of the sources.