Maruti and Hyundai are looking to take the fuel to even smaller cars. Maruti, India's largest carmaker, currently offers two diesel small cars in the Indian market - Swift and Ritz.
The government does not discourage the sale of diesel cars, rather, it is looking to allow the use of diesel in even smaller cars companies.
With 1.3-litre DDiS engines, the company is in the process of developing a smaller diesel engine with Fiat, thanks to parent company Suzuki Motor Corporation of Japan having a global association with Fiat, which has greatly benefited Maruti.
According to R C Bhargava, chairman, Maruti Suzuki India Ltd, the company had been asking Suzuki from time to time that it needed diesel engines but the company was traditionally strong in petrol. He added, Suzuki and Fiat had a global tie-up and the company obtained the 1.3 litre engine from the Italian automaker.
He added only Fiat would be able go for a smaller engine, but considering how things were going, India would be sure need more diesel cars in future.
Models like Wagon-R, Estilo and A-Star, would be considerably benefited with the smaller diesel engine.
Meanwhile, Hyundai, with one diesel offering - i20 - in the small car space, would be going for a diesel avatar of its best selling car i10, after its diesel engine factory in India becomes operational.
The company had announced plans to set up a diesel factory last year, but put it on hold awaiting the government's directive on fuel pricing in the budget. The company is now looking to take those plans forward. (Also see: Maruti to set up new diesel engine plant at Gurgaon)