Gamesa Corporacion Tecnologica SA (GCTAY), the Spanish wind-farm manager and turbine maker, is building new factories in India to tap growing demand for electricity in the South Asian nation where conventional fuels like coal and gas are in short supply.

Gamesa Wind Turbines Pvt. Ltd. is building a factory in the southern city of Chennai and two facilities in the western city of Vadodara to manufacture wind-turbine parts, the Indian unit's chairman, Ramesh Kymal, told Dow Jones Newswires on the sidelines of a news conference.

The company already has a facility in Chennai to make rotor blades.

It will spend INR2.0 billion ($37.5 million) between now and December on the projects, Kymal said. The Indian unit has invested INR5.50 billion on its Indian facilities so far since January 2011, he added.

He didn't say by when the new facilities will become operational.

India is a key emerging market for Gamesa, Europe 's second-largest wind-turbine manufacturer by market value after Vestas Wind Systems A/S (VWDRY), as it is facing a slump in demand in its traditional markets of the U.S. and Western Europe which are hurt by an economic slowdown.

Gamesa sold 8% of its turbines in Spain last year, compared with 39% three years earlier. Its largest markets now are China and India .

Production cost is higher for electricity from non-conventional sources such as wind, compared with coal- or gas-based generation units. Coal and gas fire more than half of India 's electricity-generation capacity of 200 gigawatts, but a shortage in the fuels' local supply is forcing power producers to cut production or to buy expensive imports, leading to hikes in power tariffs.

Companies like Gamesa hope that this situation, and the government incentives to renewable-energy projects, will allow them to find takers for costlier wind and solar power.

"A shortage of power and fossil fuels as well as an overall increase in (power) tariffs will drive demand for wind energy in India ," Kymal said.

The local unit's head of sales and marketing, K.V. Sajay, said it aims to increase its turbine sales by 40% from last year to 700 units in 2012.

India is focusing on harnessing more energy from sources such as wind as it aims to reduce its dependence on fossil fuel.

The country's installed renewable-energy capacity is about 24 GW and the government aims to increase it to 50 GW by 2020.

India is the world's fifth-largest wind energy market. Wind-energy accounts for nearly three-fourths of the country's total renewable-energy capacity.

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