Mumbai: Japanese auto major Suzuki Motor Corporation wants its Indian subsidiary Maruti Suzuki to increase research and development (R&D) for small car engines to meet growing demands.

Suzuki Motor Corp chairman Osamu Suzuki has told the board of Maruti Suzuki India to strengthen R&D of small engines of up to 1,200 cc, Maruti chairman R C Bhargava told shareholders of the company at its annual general meeting.

Bhargava said Suzuki, which owns 54.2 per cent of Maruti, wanted to shift to bulk of its research and development on cars with engine capacity of 1200 cc or lower to India.

"Now 60-70 per cent of it is being developed in Japan. Suzuki wants to make 90 percent in India," he said without elaborating.

Maruti Suzuki India Ltd, India's top car maker, said it is focusing on fuel-efficient small cars, hybrids, electric and multi-fuel cars, but has no plans to launch an ultra-cheap small car.

Already Suzuki has announced its plans to make India an R&D hub and bring the level of product developments to that in Japan.

Bhargava said that going forward small car sales are going to rise and that of bigger cars drop considering the increase in global oil prices.

''His (Suzuki chief) view is that oil and commodity prices have increased and the old prices are not going to return. Keeping this in mind, he also emphasised on the need to develop more fuel efficient and less emission cars such as multi-fuel, electric and hybrid cars," Bhargava added.

Bhargava said Maruti was working on developing vehicles which would use cheaper alternative fuels like CNG. It would also enable Maruti vehicles to meet the post-2010 emission and safety regulations, he added.

Maruti Suzuki has about half of the Indian car market, with models such as the best-selling Alto and Swift hatchbacks, and has been shifting consumers to premium models such as the DZire sedan.

But the high cost of inputs such as steel have hit margins, while surging inflation, rising interest rates and higher fuel prices have hurt consumer demand in Asia's third-largest economy.

Maruti sold 711,818 cars in India in the 2007-08 fiscal year that ended in March, and has targets of 1 million local sales and 200,000 exported vehicles by 2010-11.