Pierburg, the auto component subsidiary of e 3.5 billion German group Rheinmetall, is looking at setting up a manufacturing facility in India.

Pierburg is exploring the option of entering through a joint venture with an Indian partner. The greenfield unit, which would be its second Asian plant after the existing one in China, is likely to be operational as early as 2008.

Speaking to ET, Pierburg’s management board chairman, Hans-Joachim Esch said, “India is one of the fastest growing diesel powered markets and hence a priority for us. We intend to set up a production facility in India to cater to the constantly changing diesel technology and the new emission norms.”

While Pierburg is still finalising the investment and location for the production facility, it is most likely to be established in Pune, where the company has already created a sales set-up. The euro 900 million German component maker will produce exhaust gas recirculating valves (EGR), oil, water and vacuum pumps for the diesel technology.

“Once the facility is finalised it will initially operate as an assembling unit and then we will gradually shift to manufacturing the components,” Mr Esch said. The company’s current revenues from the Indian market through exports from other facilities stand at about (10 million.

Mr Esch explained the rationale for entering India, “Globally, we are supplying to partners like Volkswagen, Renault, BMW among others and now that they are in India it becomes even more important for us to start producing our components here.”

According to industry experts, diesel technology’s share in the country currently stands at 22% and is expected to increase to about 45% in the next five years.

“While the Japanese companies are experimenting with hybrids for achieving fuel efficiency, Europeans are shifting to diesel. In India too, we believe diesel will be the most popular way to drive fuel efficient mode of transport,” he added.