NEW DELHI: The Indian arm of German engineering giant Bosch said Monday it would invest more than 400 million dollars over two years to expand in the country's fast-growing diesel engine market.

"India is witnessing a strong increase in demand for diesel engines," the company, a major maker of diesel injection systems, said in a statement.

"The diesel engine consumes 30 percent less fuel than the gasoline engine, while common-rail technology reduces the pollutant emissions of diesel engines, thus making it possible to meet strict emission standards."

Bosch introduced common-rail fuel injection systems in India in 2006, the statement said, adding nearly a quarter of the new investment would be earmarked for research.

India is Asia's third-largest car market after China and Japan, where Japanese-owned Maruti Suzuki holds a commanding lead. Indian car sales are expected to cross two million units next year.

Bosch Automotive Group chairman Bernd Bohr told a press conference that sales in India grew by five percent to 68 billion rupees (1.4 billion dollars) in 2009.

India, which currently accounts for about five percent of the company's global auto business, is likely to account for seven to nine percent of its total auto business by 2017, he said.

"India is a very important market for us, and it has been profitable as well," Bohr added.