Vehicle sales in India hit their highest-ever level in September, prompting a local industry trade group to raise its sales projection for the current financial year.

The Society of Indian Automobile Manufacturers now expects car sales in India to grow 18% to 20% through March 31, 2011, up from its previous forecast of 13% to 15%.

But difficulties setting up a finance arm have induced Toyota to forgo an Indian captive.

“It is not easy to set up the finance arm in India,” said Yukitoshi Funo, Toyota Motor Corp. executive vice president and board member. “Our officials in India are resisting such a move.”

Part of the problem for Toyota is the requirement that funds for auto finance ventures be sourced from India itself.

In any case, Toyota Financial Services Corp. has operations in more than 30 countries and covers about 90% of the markets in which Toyota sells vehicles.