Maruti Suzuki will invest 350 billion rupees ($3.9 billion) to build a new manufacturing plant in Gujarat, deepening its footprint in western India as it moves to meet rising domestic demand and strengthen its export base in the world’s third-largest car market.
The decision marks one of the most significant capacity expansion moves by an Indian automaker in recent years, underscoring both the strength of domestic demand and the company’s ambitions beyond India’s borders.
According to the Gujarat state government, the proposed plant will add production capacity of up to 1 million vehicles annually, with manufacturing expected to begin in the 2029 financial year. Once operational, the facility will lift Maruti Suzuki’s total annual production capacity to about 3.4 million vehicles, up from roughly 2.4 million today.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026).
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab (class begins Jan 24 2026).
The investment comes at a time when India’s passenger vehicle market continues to show strong momentum. India is now the world’s third-largest car market, and demand has been supported by rising household incomes, easier access to vehicle financing, expanding road infrastructure, and a growing preference for personal mobility. For Maruti, which dominates the entry-level and compact segments, these structural trends remain central to its growth story.
Near-term indicators already point to tight supply conditions. The company currently has an order backlog of about one and a half months for its entry-level models, according to its marketing and sales head, Partho Banerjee. In December, Maruti said sales to domestic dealers surged 37% year on year to a record 178,646 units, highlighting how quickly demand is absorbing existing capacity.
The board has approved an initial investment of 49.6 billion rupees to acquire land for the Gujarat plant, signaling that the project is moving beyond the planning stage. Gujarat has increasingly become Maruti’s manufacturing base of choice, complementing its older facilities in Haryana. The state offers logistical advantages, including access to ports that support exports, as well as a policy environment that has consistently attracted large industrial investments.
Exports are an important part of the expansion logic. Maruti has steadily increased shipments to markets in Africa, Latin America, and parts of Asia, positioning India as a global production hub for Suzuki’s small and compact vehicles. Additional capacity in Gujarat strengthens Maruti’s ability to scale exports without compromising supply to the domestic market.
The long timeline to start production, with output expected only from 2029, also reflects the capital-intensive nature of modern auto plants and the company’s measured approach to expansion. Rather than chasing short-term spikes in demand, Maruti appears to be planning capacity that aligns with its medium- to long-term outlook for India’s auto market, which it expects to keep expanding steadily rather than explosively.
The investment also comes against the backdrop of a changing automotive landscape. While Maruti remains heavily focused on petrol and compressed natural gas vehicles, it is gradually preparing for a future shaped by tighter emission norms and growing electrification. Having additional manufacturing capacity gives the company flexibility to adjust its product mix over time, whether that means scaling up hybrids, introducing more electric models, or responding to regulatory shifts.
For Suzuki Motor, which owns a majority stake in Maruti, the project reinforces India’s central role in its global strategy. India is not only Suzuki’s largest market by volume, but also a critical export base, and large-scale investments such as the Gujarat plant underline the parent company’s long-term commitment.
At the state level, the project strengthens Gujarat’s standing as a key manufacturing hub and is likely to generate significant employment and ancillary industry growth over time. Maruti Suzuki is thus pushing that capacity constraints should not be what limit its growth in a market where demand remains strong, competition is intensifying, and scale continues to matter.
Taken together, the Gujarat investment is less about responding to a single strong sales year and more about positioning for the next phase of India’s automotive growth cycle—one in which Maruti Suzuki intends to remain firmly in the driver’s seat.