Tata Motors and Mahindra & Mahindra have shown interest in taking over Fiat's factory in Termini Imerese, Italy, according to Indian newspaper Business Standard.

The Indian companies are separately holding negotiations with Fiat, the newspaper said, citing unnamed senior officials accompanying Italy's minister for economic development, Claudio Scajola, who is on a visit to India.

Scajola told the Business Standard he was not aware of the development, but said: "Indian investors, including Tata Motors and M&M are welcome in Italy."

Fiat said in June that the Termini Imerese plant in Sicily would halt production of the Lancia Ypsilon by 2011 and the plant's future has remained uncertain.

Tata Motors has a joint venture with Fiat in India, which makes models such as the Palio, Linea and Grande Punto.