The government today cleared the proposal of Japanese auto major Suzuki Motor Corporation to set up a 30:70 joint venture in the country with Maruti Udyog [Get Quote] Limited.

This was amongst the 25 foreign direct investments worth Rs 145.12 crore (Rs 1.45 billion) approved by Finance Minister P Chidambaram on Thursday.

MUL's board had cleared this proposal in March last year, envisaging an investment of Rs 3,272 crore (Rs 32.72 billion) to produce cars and set up a new engine and transmission plant in Manesar, Haryana.

The investment in the car project will be Rs 1524.2 crore (Rs 15.24 billion). The plant will have an initial capacity of 100,000 cars per annum,with scope to scale it up to 250,000 cars per annum. The new car manufacturing plant will begin commercial production by the end of 2006.

In addition to manufacturing diesel engines for cars, as decided earlier, this facility will also manufacture petrol engines and transmission assemblies. Total plant capacity will be 300,000 diesel engines per annum to be developed in phases. Investment in this facility will be Rs 1747 crore (Rs 17.47 billion).

The initial annual capacity of this facility will be 100,000 diesel engines, 20,000 petrol engines and 140,000 transmission assemblies.

A release from Maruti said it would be gradually expanded in line with market demand. This facility will begin commercial production by the end of 2006.

The proposals, cleared by Chidambaram on the recommendation of the Foreign Investment Promotion Board, also include setting up of a wholly-owned subsidiary by Italy-based Guarniflon SPA for research and development of polytetrafluoroethylene compounds, and semi-finished and finished products. The proposal is for Rs 68.70 crore (Rs 687 million) of foreign direct investment.