The likely visit of Fiat Chief Executive Officer Sergio Marchionne to India within ten day's time to meet with the chairman of the Tata Group, Ratan Tata, has raised speculations of a major announcement from the two companies soon, reports India's The Financial Express newspaper. Industry sources reckon that the two companies may announce a tie-up regarding the use of Fiat Palio's petrol engine for Tata Indica, amongst others.

Tata's small car, the Indica, has had a strong presence in the diesel segment and has also been a niche player, mainly due to the absence of other diesel small cars. The sales of petrol versions of the Indica is quite negligible though.

Now, with Maruti setting up a diesel engine making facility in Gurgaon and planning to launch diesel variants of all its small cars, the position of Indica as the only diesel small car is threatened. Hence, strengthening its presence in the petrol segment becomes essential for Tata Motors, point out the industry experts. The speculation surrounding Tata Motors using Fiat's Kurla or Ranjangaon manufacturing facility for their own production has been ruled out by Tata officials themselves.
 

So have the many rumours about the company using Fiat's marketing presence to enter other markets. Another possibility that arises is the sharing of Fiat's Euro IV engine technology. The Euro IV norms for vehicle emissions have been implemented in European markets, since the beginning of this year. Analysts, however, point out that, to upgrade from a Euro III to Euro IV would not require much technical expertise. Tata Motors has developed Euro III technology indigenously and to move up to Euro IV would not be regarded as a difficult task.

This article appears in The Financial Express