India's top truck maker Tata Motors has agreed to buy the truck-making arm of South Korea's failed Daewoo conglomerate, a key step in its plan to cut reliance on the cyclical Indian domestic market, Reuters reported.

The vehicle maker, owned by the Tata group, India's second-largest business conglomerate, will buy Daewoo Commercial Vehicle Co. Ltd for about 140 billion won ($US118 million), the South Korean firm reportedly said on Wednesday.

"The transaction is expected to close in the next two to three months, subject to a final due diligence of Daewoo's operations, the negotiation of further agreements and the receipt of applicable regulatory approvals in India and Korea," Tata said in a statement cited by Reuters.

The news agency noted that the buy-out will add to Tata Motors' growing international profile, following a deal it signed last December with Britain's MG Rover Group to sell 100,000 units of its Indica car over the next five years for the European market.

Tata plans to boost the share of exports in sales to 15-20% in five years from 5%, to beat the effects of cyclical swings in the domestic vehicle market and boost growth, Reuters added.

Daewoo Commercial, spun off from bankrupt Daewoo Motor in November 2002, is the second-biggest maker of heavy vehicles in South Korea with a market share of 26%, Reuters said.

Its Kunsan plant can produce 20,000 vehicles a year and it recorded 12 billion won in operating profit in the first half this year, the report added.

The South Korean firm said in a statement cited by Reuters that the expected sale price did not take into account some 47 billion won in unpaid bills and reserve requirements.

Sale of the truck unit will mark the end of Daewoo Motor Co's restructuring, Reuters said, noting that its core passenger car operations were transformed into GM Daewoo Automotive Technology Co after receiving investment from General Motors.

Analysts told Reuters that Daewoo's product range will complement Tata's range of medium-size trucks and give it a technology platform for high-end vehicles that it can develop further.