Isuzu plans to be the first Japanese automaker to produce mid-size buses in India later this month, a weekend report said.

Japan's largest truck maker will join with Sumitomo and Swaraj Mazda in a new plant next to their existing factory in northern Delhi, the Nikkei newspaper, citing unnamed sources, reported, according to Agence France Press (AFP).

Citing the paper, AFP said the buses would be priced around JPY1.5m ($US13,200), some 20% higher than buses made by local manufacturers but 10-20% lower than those offered by European rivals.

Isuzu plans to expand production to include trucks by 2010, the report said.

When the new plant starts to operate at full capacity, the company's two lines will be capable of producing 40,000 to 50,000 vehicles annually, the Nikkei said, according to the news agency.