A flurry of reports suggest that Fiat is about to sign a major pan-global alliance with Indian carmaker Tata. The two companies will co-operate in a wide number of areas, including research, development and production of cars destined for overseas markets, while Tata is expected to gain access to Fiat's global retail and distribution networks to help its expansion ambitions.

Tata Motors - established in 1945 - is part of the Tata Group, India's largest private sector industrial conglomerate, which has a presence in sectors as diverse as IT, engineering, chemicals and tourism. A family controlled buisness, the leading members are believed to be very close to the Agnelli family, Fiat's biggest shareholder group. Tata Motors, which is now the world's fifth largest manufacturer of medium and heavy commercial vehicles, have well know ambitions to expand their automotive operations overseas, and recently their small 'V2' model has been sold in the UK by the now-defunct MG Rover, badged as the 'Cityrover'. Currently Tata export 17 percent of production, with targets to raise this figure to 20 pct by the end of 2005.

Kausik Datta - writing in India's Business Standard newspaper - quotes sources described 'as being close to the developments' as saying "that a memorandum of understanding will be announced shortly."
 

He adds, "This will be the first instance of an Indian automobile company joining hands with a foreign peer in global markets." The sources also added that a joint Tata and Fiat team, would be set up to manage, what it described as a 'mega alliance'.

The Business Standard report concludes that "such a co-operation in the global markets would be a win-win situation for both the companies. While the Italian car major, which is in the process of turning around, gets a strong Indian ally with global ambitions, Tata Motors will stand to gain from Fiat's retail network, especially in its efforts to accelerate growth by tapping new export markets."

Fiat CEO Sergio Marchionne recently announced a new joint venture with US carmaker Ford to build a new 'sub' B-segment small car, and news of further co-operations is promised before the end of the year. Fiat have invested heavily in India in recent years, but with little return. They have two assembly plants (at Kurla and Ranjangaon) which remain virtually idle, and any agreement with Tata could see the excess production capacity of these two facilities outsourced.