The programme is set to get underway after the plant manufacturer was awarded £4.5m towards the cost from the Government’s Regional Growth Fund.
Design and research into the new engine project will take place at JCB Power Systems in Foston, Derbyshire, where the company’s world-beating JCB Dieselmax engine is manufactured.
The plant manufacturer has already started the search to fill 50 advanced engineering vacancies in Derbyshire for the design and development phase of the new engine.
Roles up for grabs include engine design and development engineers, engine electronics and software engineers, quality technicians, manufacturing engineers, applications engineers, supplier development engineers and buyers.
Around 300 more jobs will be created when the engine goes into production across JCB’s Staffordshire, Derbyshire and Wrexham factories between 2016 and 2021.
JCB Chief Executive Alan Blake said: “Since we began production in 2004, JCB has led the way in off-highway engine development, with a range of fuel saving, clean and highly efficient engines.
“The announcement that we now intend to invest £31 million developing our next generation engine is an important step in building on the success we have enjoyed so far and it will take the efficiency, productivity and environmental performance of our engines to new levels.
“The new JCB engine will give our products a huge competitive edge across global markets, which we anticipate will lead to substantially increased sales between 2016 and 2021.
“That rise in demand will result in the creation of an additional 300 positions at our UK factories in addition to almost 50 engineering roles we are recruiting for immediately.”
JCB began manufacturing its Dieselmax engine range at its Derbyshire plant in 2004.
This year the company also opened a new engine production facility in India for the production of fuel-efficient engines for its Indian-built products.
JCB’s own engines now power more than 70% of the company’s equipment range.
The same engines also powered the JCB Dieselmax car to a new world diesel landspeed record of 350.092mph on the Bonneville Salt Flats, USA in 2006.
Last year JCB announced it had made one of the biggest investments in its history to develop the off-highway sector’s cleanest engine, in readiness for increasingly stringent emissions legislation in both the United States of America and in Europe.
The new JCB Ecomax T4 4.4 litre engine eliminates the need for any exhaust after-treatment and delivers cost savings for customers.