MUMBAI/HONG KONG (Reuters) - South Korea's Hyundai Motor is looking to dilute a stake of up to 17.5% in its India entity's IPO for which it plans to file papers on Friday, aiming to raise $2.5 billion to $3 billion, said three sources with direct knowledge of the matter.

Hyundai, India's second-biggest carmaker behind Maruti Suzuki, is likely to file the papers with India's stock market regulator, the people said.

Hyundai did not respond immediately to a request for comment. There will be no issuance of new shares in the IPO, which will only see South Korean parent dilute its stake.

(Reporting by Aditi Shah and M. Sriram; Editing by Aditya Kalra and Neil Fullick)

By M. Sriram, Aditi Shah and Scott Murdoch