India's federal government has passed control of carmaker Maruti Udyog to long-time joint venture partner Suzuki Motor, according to website AutoAsia Online.

The website says the three-part deal will eventually raise $US495 million in cash for the government and see India become Suzuki#;s global small car production base.

AutoAsia Online says the first stage of the deal, which already faces court challenges, is a rights issue worth $81.45 million to existing Maruti shareholders which will allow Suzuki to gain majority control with a 54.2% equity holding, up from the current 50%.

The government will receive a control premium of $205 million from Suzuki, reducing its holding in Maruti from 49.74% to 45.54%, and the outstanding 0.26% will continue to be held by a Maruti employee benefit fund, the website added.

Citing sources close to the negotiations, AutoAsia Online said that the size of the control premium was contentious and it took nearly a month of haggling to reach agreement.

The website says that the second stage, due before March 2003, is an Initial Public Offering (IPO) which will see the government#;s stake fall to 25% and the third stage will result in the government completely leaving the venture.

Maruti chairman and managing director Jagdish Khattar told AutoAsia Online that Suzuki had planned a global role for the company.

"We are given to understand that Suzuki has a road map planned for Maruti. It could quite well use India as a global base for small cars, which we're good at," he told the website, which added that Maruti becoming a global source for some Suzuki models was integral to the final agreement.

The company is already the main source of the recently redesigned Alto, sold with Suzuki badging in export markets including Europe.