The company has invested more than $2 billion to build factories in the country, but it has not so far won major market share from competitors such as Hyundai Motor Co 00580.KS and Maruti Suzuki India Ltd (MRTI.NS) which dominate the small car segment.

It would be the first time the firm has shipped Indian-built engines to Europe. Ford will have the capacity to build 450,000 cars and 600,000 engines in India by 2015.

"From an engine perspective, we'll be exporting not just to Europe but also to Thailand," said Gary Johnson, vice-president, manufacturing, Asia Pacific and Africa. He did not provide more details. "If somewhere needs more engines and we've got the capability, then we're going to ship them," Johnson told Reuters in an interview at a automotive conference in New Delhi.

Ford India currently exports 40 percent of its engine production and 25 percent of its car production to 35 countries.

"Europe has got significant manufacturing capacity itself," said Michael Boneham, president of Ford India. "So it's probably not that smart to go and ship cars out of India to Europe... For us it's probably more you look at the engines."

The company, which is laying off temporary workers in Europe, shortening work days and slowing the speed of assembly lines, has said it will lose more than $1 billion in Europe in 2012. In the second quarter, it lost $1,125 for every vehicle it sold in the region.

Ford India sold 96,270 vehicles domestically in 2011, while Hyundai Motor India sold 373,709, according to data from the companies.

(Reporting by Henry Foy; Editing by Daniel Magnowski)

• A Permanent Economic Emergency