New Delhi: Suzuki Motor Corp is believed to have reached an agreement with the Government on its plans to set up a second Indian factory, which many had viewed as violative of the Japanese firm's existing contract terms with its local car-making affiliate Maruti Udyog Ltd (MUL).

Details of the understanding reached at a meeting between a high-level delegation from Suzuki, comprising MUL chairman S Nakanishi and managing director Jagdish Kattar, and Heavy Industry secretary Adarsh Kishore were not immediately known.

"The controversy has been resolved," said a source, adding the details would be known only after MUL board meets tomorrow on Suzuki's plan to set up another diesel engine unit.

Suzuki had earlier this month said that the 250,000-unit per year production line would be jointly owned with Maruti, and benefits from the Indian car market growth would be split between the two companies.

However, it did not provide details of the ownership structure and investors fear Maruti's own growth prospects may be hit.