Fiat SpA and India's Tata Motors Ltd. on Thursday were reported to have said they are examining an alliance that would include production and distribution of automobiles for India and other markets.

The Associated Press said the companies have agreed to set up a working group to examine the feasibility and the details of the cooperation in both the short and the long term, they said. If the outcome is positive, the companies will stipulate a formal agreement in the coming months.

"Fiat and Tata are looking at opportunities for working together and have signed a memorandum of understanding to cooperate in development, purchasing, production, components and sales in the automotive sector," the two said, according to the report.

Tata Group and Tata Motors chairman Ratan Tata reportedly said "both companies will benefit from this alliance, in terms of opportunities to develop products together and share (automotive) platforms."

Fiat and Tata did not provide any further details, AP noted.

"The understanding reached with Tata is another step in our strategy of looking for specific, targeted partnerships for the auto sector," Fiat chief executive Sergio Marchionne told the Associated Press.

The news agency added that theTurin-based company announced earlier this month that it had reached an agreement with Ford that would have them working together on new models of their small cars.

AP said that Fiat is already present in India with Fiat India Ltd., a joint venture with Fiat and India's Premier Automobiles Ltd., that manufactures the Palio at a factory near Mumbai.

The company reportedly did not say whether it was terminating that accord. The alliance with Tata, however, will permit it to increase market share in India's rapidly growing passenger car market as well as possibly tap Tata's export markets in the Middle East with India-produced vehicles, the Associated Press said.

The news agency noted that Tata Motors, part of the Tata group, is India's largest carmaker, making compact and low-cost vehicles. It is also India's largest truck producer and among the top three makers of automobiles, selling vehicles in Europe, Africa, the Middle East, South East Asia and Australia.