Shares of Bajaj Auto surged 3.3 percent to Rs Rs 2,874 a piece in morning trade. Its gain is the most in over two months after the automaker in a statement said that it plans on expanding its three-wheeler and quadricycle capacity to one million units per year on Thursday.

The decision comes amid Minister of Road Transport and Highways, Nitin Gadkari's announcement that the government will end mandatory permit for three-wheelers, buses and taxis running on CNG at the 58th SIAM Annual Convention on Thursday. To give a kick to the alternate fuel section in India, the government has been working on reducing dependency on petroleum products. He also said that the country will get 10,000 CNG fueling stations by 2030.

Bajaj Auto makes over 50 percent of its revenue from CNG auto-rickshaws and expects the new initiative by the central government to benefit it. This is because when a similar decision was taken by the Maharashtra government around 12 months ago, the company saw a 60 percent jump in its sales volume. A PTI report said that the auto-maker has a significant market share of 86 percent.

Between September 2017 and August this year, Bajaj Auto had sold 4.35 lakh 3-wheelers, registering a growth of 88 percent over the year-ago period, the company's statement release said.