Fiat India's plan to manufacture its own 1.5-litre diesel engine at its Ranjangaon facility has been put on hold for now. The engine was supposed to be a downsized version of  Fiat's 1.6-litre diesel currently featured in the Maruti S-Cross. Fiat's decision comes from the fact that its key partners Maruti and Tata have started development of their own 1.5-litre diesel engines to stop their dependence on third parties.

Maruti has developed its own modular family of in-house diesel engines with the first being an 800cc two-cylinder unit that launched earlier in 2015 under the hood of the Celerio. The second engine, a 1.5-litre four-cylinder diesel – a downsized version of the 1.6-litre unit made by combining two 800cc two-cylinder engines – was slated to make its debut sometime next year in the upcoming YBA, but problems in the development stages has resulted in a delay. The third engine is likely to be a 1.1-litre three-cylinder engine.

Tata has been working on a 1.5-litre diesel engine which will be introduced in the Nexon concept based compact SUV (Codename: Osprey) that will make its debut in 2016. The new Tata diesel engine is expected to develop 110bhp with company sources saying that it would not compromise on fuel efficiency in the process. The new engine is expected to be paired to a six-speed manual gearbox at the time of launch.

Fiat has been providing Maruti and Tata with the 1.3-litre diesel engine till date, and was banking on the two manufacturers for its new 1.5-litre engine to be used in their existing or new models. With Maruti and Tata headed in this direction and Fiat’s dwindling sales of 694 units per month (six month average) as against the required 4,500 units per month in the Indian market, the company cannot find a reason to invest heavily in the manufacturing process.

While Tata’s new 1.5-litre in-house developed diesel engine is expected to enter production by end of 2016, Maruti’s counterpart is only expected to make its debut sometime around 2018.