Alternative Fuel Systems Inc (AFS), based in Calgary, Canada, has signed the agreement with Motor Medics (India) Private Limited (MIP) for the sale of its Sparrow systems which will be installed in Maruti vehicles.

Under the agreement, MIP has to "immediately" begin negotiations with Maruti Udyog Limited (MUL) for the annual minimum supply of 20,000 Sparrow conversion systems with high pressure gas components. The collaboration will also lead to MIP locally manufacturing the systems under a licensing agreement. MIP will source capital and personnel and AFS will supply the expertise and transfer technology, company sources here said. The purchase agreement is subject to AFS receiving approval for the conversion systems from the Indian Institute of Petroleum in Dehradun.

The initial minimum annual sales isexpected to be around $25 million. According to officials here, each system is being sold to MIP for $1,300. AFS recently supplied its fuel conversion systems for a pilot project in which a Maruti Esteem passenger car was installed with an AFS Sparrow conversion kit.