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Japanese car major Toyota's small car plans for India will either involve a brand new car based on its Yaris platform or an India-specific model developed from scratch.

Sources in the auto industry say that the company is still working out its cost feasibility between these two options although it has already kicked off its second plant plans.

Reports say that Toyota's Indian subsidiary, Toyota Kirloskar Motor may announce its small car project before the end of 2007. The car is being built on a new platform in Toyota's second plant which is likely to come up in Bangalore with an investment of around Rs 2,000 crore.

"The new car is being built on a new platform and that is the reason we have taken more time than was expected," Toyota Kirloskar Motor MD Atsushi Toyoshima told Economic Times.

Reportedly, Honda is using its Fit/Jazz platform to churn out a next-gen product for India.

Auto industry sources say Toyota may follow the Innova model for its small car sourcing from specific low-cost centres and selling the model in Asia and the BRIC markets. The small car may also come with both petrol and diesel power trains.