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Italy's Piaggio to buy auto parts from India

NEW DELHI, Nov 28 (Reuters) - Italy's Piaggio, maker of the famous Vespa scooter, said on Friday it planned to buy parts worth over 10 million euros a year for a new generation of quadracycle it will launch in Europe by September 2004.

"Component manufacturing in India, in our experience, is 35 percent to 45 percent more cost-effective than in Europe, making the final product much more competitive," Rocco Sabelli, Piaggio's chief executive, told an India-EU business meeting.

"India is on the road to becoming a production hub for European brands, and on our part the new Piaggio four-wheel product that we will make for the European market in 2004 will be made about 50 percent in our Baramati plant (in India)."

Sabelli said Piaggio would buy parts worth over 10 million euros ($12 million) including carburettors and cylinders for the quadracycle. The vehicle would have a weight of less than 1.2 tonnes and be used for transport applications.

Piaggio's Indian unit, Piaggio Vehicles Pvt Ltd, makes three-wheeled transport and passenger vehicles at a plant in the western Maharashtra state.

It has a 37 percent share of the three-wheeled goods vehicle segment and 10 percent of the passenger segment.

The head of Piaggio's Indian unit, Ravi Chopra, told reporters that the local firm would invest 1.0 billion Indian rupees ($21.8 million) between 2003 and 2004 to double plant capacity to 100,000 vehicles a year.

He said some of the investment would also be used to introduce in India three new three-wheeled models and the quadracycle in 2004.

Piaggio, which has had lengthy collaboration with two of India's leading scooter makers, Bajaj Auto Ltd and LML Ltd , said it had not taken any decision yet on making scooters again in the country through a fully-owned unit.