Foton Motor plans to set up India truck plant by 2011

Truck maker Beiqi Foton Motor Co plans to be the second major Chinese automotive manufacturer to set up a plant in India.

Foton, China's top light commercial vehicle maker and a partner of Daimler AG (DAIGn.DE), follows SAIC Motor in a move into the booming Indian auto sector.

It aims to make 100,000 vehicles annually within four years of starting production, which could be as early as 2011, sources familiar with the situation told Reuters on Wednesday.

Foton declined to comment. A Daimler spokesman in China acknowledged that the partners would explore international opportunities but that China would remain its top priority.

It was unclear whether Daimler, which has a truck manufacturing venture with Foton in China, was involved in the India project.

The Indian truck sector, the world's fourth-largest, sold 531,000 vehicles in 2009/10, up more than 38 percent on the year earlier when sales crashed by about a fifth as high interest rates, a crunch on funds and a slowing economy crimped demand.

The commercial vehicles sector is forecast to grow at about 15 percent this year, analysts said, ahead of forecast country-wide economic growth of 8.5 percent.

"It's a good move as commercial vehicles have great growth potential in India, especially light trucks which Foton is good at," said Huang Zherui, an analyst with industry consultancy CSM Worldwide.

"But it also faces challenges in a market which it doesn't have a lot of experience. A local partner could be a big help for Foton."