The Economic Times of India reports that Tata Motors and Fiat are examining options for collaboration - involving a Tata platform - to manufacture low-cost cars.

This platform sharing, however, was not envisaged in Tata Motors-Fiat's July '06 memorandum of understanding.

Fiat CEO Sergio Marchionne said the company is considering the idea of developing a low-cost car with its Indian partner Tata Motors. Speaking about the possible future collaboration Mr Marchionne said, "It will be in the short term as they have already done most of the work, we will add our know-how, and maybe the money."

Mr Marchionne's statement about a 'low-cost car' sparked speculation that Fiat was getting involved in Tata Motors' pet project, the Rs 1-lakh car. When contacted by ET, a Tata Motors' spokesperson clarified that Mr Marchionne was not referring to the Rs 1-lakh car when he spoke about 'low-cost car'.

"Both the companies are engaged in advanced discussions on projects, as already announced, and some preliminary discussions have been held on possible sharing of our platforms by Fiat for select overseas markets. These have not included the small car," said a Tata Motors' spokesperson.

Fiat could be using Tata Motors' existing or future platforms to make new cars. Taking a cue from Mr Marchionne's reference to a low-cost car, it seems likely that Fiat may use the Tata Motors' Indica platform to develop its own small car, the ET report said.

Tata Motors' last attempt at taking the Indica platform overseas through a tie-up with an international carmaker, MG Rover, failed to reap the desired rewards for both companies, the report noted.