this story originally appeared in on jan 24 2014 mumbai india a major base for exporting small cars is becoming a preferred hub for some global auto makers to develop and source compact engines ford motor co which exports its figo small car and ecosport compact sportutility vehicle from india plans to source a new generation of smallcapacity petrol engines called dragon from its local unit renault sas research unit in chennai is developing a 986 cubic centimetre petrol engine codenamed b4d in collaboration with the french auto makers facilities in brazil and europe the b4d will be an enhanced version of a 08litre engine that renault would use in a car it plans to launch in 201516 while ford plans to use india as a base for manufacturing the engines its french rival is relying on the capability of its indian research and development base both are trying to gain from indias lowbudget capabilities auto makers are looking at frugal technologies because of changing customer preference towards lowerpriced vehicles though sales have been hit by a slowdown in the economy india is a major market for auto companies who are building new capacities here especially to manufacture small cars that account for most of the local sales for these companies leveraging the manufacturing capacity in india to meet export demand helps keep costs low the cost advantage of india over other markets remains strong and it manufacturing in india is a good 30 more cost effective than a matured base of europe said deepesh rathore director of emmaaa an automotive research and advisory firm specialising in emerging markets there are competent suppliers in india with volumes getting larger it is natural for companies to source key modules of cars like engines and transmission from this country fords dragon range of engines is likely to be ready by 201617 and the us company plans to produce 15 million units of the 12 and 15litre engines a year globally a person with knowledge of the matter said india would be the main supplier with 4 lakh engines a year and fords proposed plant in gujarats sanand would be the lead producer this person said besides india the dragon engine will also be made in china europe brazil and russia the person added we dont comment on speculations related to future programmes or product strategies a ford india spokeswoman said in an email response to a request for comment ford has an engineproduction capacity of 34 lakh units at chennai and it exports 40 of this output once the sanand plant goes on stream by mid 2015 its capacity will go up to more than 61 lakh engines at renault it isnt clear yet whether india will become the main production hub for the new engine while the indian rd facility will play a key development role the company is still exploring manufacturing bases such as brazil and europe apart from india for the bestcost sourcing people close to the