Japan's Honda Motor Corp's fully owned Indian bike unit plans to expand capacity to

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meet robust demand in a market that is growing about 20 percent annually, a company official said on Wednesday. "We are doing an internal study on a second plant," said Shinji Aoyama, president and chief executive of Honda Motorcycle & Scooter India Pvt Ltd, which will reach its full capacity of 1.5 million units in 2010/11.

He did not give details on the investment or the additional capacity. India is the world's second-largest market for motorcycles and scooters, with annual sales of slightly over 8 million units. More than 15 million units are sold annually in China. Honda Motorcycle expects to sell 1.25 million scooters and bikes in the current year ending March, and 1.5 million units next year.

"We cannot let our sales stagnate, we will take a decision soon," said Naresh Kumar Rattan, marketing and sales head. The company currently has a market share of 13 percent in India where another affiliate of the Japanese parent, Hero Honda Motors, dominate with sales expected to exceed 4 million units this year.

Last December, unlisted Honda Motorcycle made its entry in the popular 100cc bike segment, taking on Hero Honda in which Japan's Honda has 26 percent and India's Munjal family about 29 percent. In 2010/11, Honda Motorcycle expects sales to rise 20 percent, powered by 110cc CB Twister bike, its first offering in this category that will compete with Hero Honda's Passion and Splendor and Bajaj Auto's Discover DTSi.