KTM has recently started selling its smaller-displacement motorcycles in Indonesia employing the CBU route. Following the positive market reception to these models, Bajaj Auto is understood to have plans to set up an assembly plant in Indonesia and begin local production using CKD kits.

Bajaj Auto had first entered the Indonesian market in 2005 with its Pulsar motorcycle under PT Bajaj Auto Indonesia but was unable to convert it into a profitable venture. The company attributed this to the domination of Japanese brands in the Indonesian market. Thus, the surge in demand for the recently launched KTM models has taken the company by surprise.

Bajaj Auto, in its recently released FY2017-18 annual report, says it is moving towards setting up a plant in Indonesia. It goes on to say that the necessary licenses are being renewed, and clearances are awaiting approval.

"The plan for PT. Bajaj Auto Indonesia is to spearhead the development of KTM and Bajaj partnership and bring the jointly developed products into Indonesia. To take this further, all the required manufacturing, import, and business licenses have been renewed. Further, studies on the product acceptability have been conducted, which look favourable," Bajaj Auto states in its 2017-18 annual report.

"CKD configurations have been created and the process of seeking clearances for these configurations has started. The company plans to kick off the business operations for PT. Bajaj Auto Indonesia in the current year with the CKD production in Indonesia,” the report adds.

KTM currently retails the 200, 250 and 390 Duke and RC models in Indonesia as CBU units. Expect these models to be manufactured from CKD units once the plant is up and running possibly within FY2019.

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