Tata Motors and Fiat are close to signing a deal on research and development and marketing, The Business Standard reported on Tuesday, according to Reuters.

The agreement would include research on cars for overseas markets, as well as the use of Fiat’s retail network for the Indian firm’s cars, the paper reportedly said, while the news agency noted that a spokesman for Tata Motors, India’s largest truck producer that also makes cars, said he had no comment.

Reuters noted that Fiat, emerging from the worst crisis in its history, has long said it wants to work with other car makers on specific projects to reduce risks and cut costs, part of a plan to return to profit by 2007 from 2002’s record loss.

Fiat has invested about 20 billion rupees ($US456 million) in its Indian operations and recently made a fresh infusion of 2 billion rupees. It has a plant in Kurla, a Mumbai suburb, with an installed capacity of 60,000 cars a year and another plant in Ranjangaon, also in Maharashtra state, the report added.

But Fiat has struggled to make a dent in the 1-million units a year Indian market. Its Palio hatchback faces competition from leader Maruti Udyog’s Swift and Hyundai‘s Getz, Reuters noted.

Fiat India’s new head has said the company would look at introducing new models after restoring consumer confidence in the brand and improving its dealer and service networks, the report added.