Auto manufacturer Ford Motor Co. is betting big on its Indian operations and plans to make it a major hub for supplying petrol and diesel engines to its operations in the entire Asia-Pacific region, as well as markets in Europe, according to a top official at the Indian operations.

Ford India Pvt. Ltd, the wholly-owned Indian subsidiary of the US-based car maker, has commenced work on a new engine-making facility in India, which will make 300,000 petrol and diesel engines here, said this official who did not wish to be named since he is not authorized to speak to the media.

Building markets: A file photo of the Ford Ikon. Ford, which makes the Ikon, Fusion, Fiesta, and Endeavour models in India currently buys its petrol engines from the Rs570-crore Avtec Ltd.

While the company has been maintaining that it is still evaluating the feasibility of making a diesel engine plant in India, the Ford official said work has indeed begun on the project and that it will come up at its existing facilities in Chennai. “Work has already started on localization of components for the engines," he said. Some vendors also said they have been contacted by the firm for the new engines project.

The official did not say how Ford, which is struggling with losses, plans to fund this facility. Ford has put its iconic British brands Land Rover and Jaguar on the block, with Tata Motors Ltd and others in the race to buy them.

“There is a huge demand building up in the Asia-Pacific region, Europe and other markets across the world, and Ford India will cater to the requirements," said this official. He declined to provide the exact timeline for the project, saying the finer details are being worked out just now. “Ford Motor’s top management will make an announcement shortly about this new project," the official added.

Ford India’s official spokesperson said, “We continue to study various opportunities in the market and have nothing to talk about at this point of time." The company is on a 10-day break for Christmas and its annual plant maintenance.

The car maker, which makes the Ikon, Fusion and Fiesta passenger cars in India, and also the Endeavour—a sports utility vehicle—currently buys its petrol engines from the Rs570-crore Avtec Ltd, a GP-CK Birla group company, in which private equity firm Actis also holds stake.

Asked if this would mean that the company will pull out of the arrangement with Avtec, the Ford official said that the company would continue to buy from Avtec, but also make petrol engines on its own. “The installed capacity at the new plant would be in the region of 3,00,000 units, but the ratio of diesel to petrol is part of our internal strategy and we will decide depending on how demand evolves from global markets," he said.

He declined to give details on which of the diesel engines (it currently imports these from Europe), it will manufacture at the new plant.