New Delhi: Maruti Suzuki India is expecting to finalise a deal with Fiat to source diesel engines in the next two months, which is likely to help it in increasing the production of its popular compact car Swift.

"We are in discussion with Fiat for sourcing of diesel engines from their Ranjangaon plant. In fact, we are in fairly advanced stage and in two months time, we should see something on this," Maruti Suzuki India (MSI) Chairman R C Bhargava told reporters here.

He said the deal with Fiat is being worked out considering the fact that the company's main supplier Suzuki Powertrain India Ltd (SPIL) has reached its peak production capacity at the Manesar plant.

"SPIL has a capacity of 25,000 units per month. It has attained the peak, so we are looking at Fiat," he said.

Asked how many engine the company is looking to source from Fiat, he said: "It would depend on the kind of capacity they can give us. It is just how much production Fiat can do
at their plant."

Bhargava, however, said once the deal is finalised, MSI's Swift production will go up to about 20,000 units a month. Before the labour strike this month, the company was making
about 18,000 units of Swift a month.

"By January 2012, the production of Swift should go up to about 20,000 units per month. This has factored the engine supply that will come from Fiat," he said.

Fiat's Ranjangaon plant has a capacity to produce up to 3 lakh units of engines per annum.

Commenting on the demand of the model, Bhargava said the company has over 1,00,000 bookings so far and "88 per cent of them are diesel".

"At the current levels of production, it will take us about six months to clear the backlog," he added.

The company said due to long waiting period, there has been cancellations of booking orders for the Swift.

"The cancellation of orders of Swift is 8-9 per cent since the new version of Swift was launched in August. As of now the waiting period for Swift diesel is 6 months and petrol is 2-3 months," MSI Managing Executive Officer (Marketing and Sales) Mayank Pareek said.

The company, however, is still continuing taking bookings of the model, he added.