The company, which is present in India through a joint venture with the Kirloskar Group, will be increasing the capacity of its plant in Bangalore to 3.1 lakh units per annum by March next year from 2.1 lakh units at present.
"We will invest Rs 900 crore to expand the capacity of our Bangalore plant by March next year. The production capacity will increase to 3.1 lakh annually from the 2.1 lakh units at present," Toyota Kirloskar Motor (TKM) vice-chairman Vikram Kirloskar said on the sidelines of the annual convention of SIAM or the Society of Indian Automobile Manufacturers.
He added that most of these investments and the increase in production would be for hiking the capacity of Innova and Etios.
On the company's plans to set up a diesel engine manufacturing plant, TKM managing director Hiroshi Nakagawa said: "It is under discussion and we have not taken any decision yet. It will take time".
Last month, the company had said it was unable to convince its Japanese parent to invest on a diesel engine manufacturing plant in India due of the lack of clarity in pricing policy of the fuel in the country.
In April this year, TKM is understood to have put forward a proposal to set up the plant after the Budget for 2012-13 spared diesel vehicles from additional taxes.
There has been a demand to increase taxes of diesel passenger vehicles from different quarters to prevent usage of the subsidised fuel for "luxury". However, the automobile industry has been asking the government to deregulate diesel price in line with petrol.