Senior Renault officials did not rule out the group's entry into the car and truck sector in future but did not give any details.

Renault is investing around $20 million in its tractor manufacturing and marketing ventures in India.

As part of its entry into the tractor market, the $600 million Ranault Agriculture, a 100-per cent subsidiary of the Ranault group, on Friday signed a memorandum of understanding with Rs 123.4 crore-International Tractors Limited, makers of Sonalika brand of farm equipments and tractors.

There is provision to increase Ranault's stake in ITL to 27 per cent, said ITL chairman LD Mittal.

The French company will be using ITL's manufacturing facilities in Hoshiarpur to make Ranault tractorsin the 65 to 185 hp range, said Mittal. ITL plans to increase capacity of the Hoshiarpur plant from present level of 1,500 to 3,000, he added.

Further, Ranault and International Tractors will be floating two export-oriented marketing joint venture companies in which Ranault will have a majority stake of 60 per cent. One of the companies will target the global market (excluding Europe) to export Ranault and Sonalika products. The other one will exclusively focus on the Eurporean market.

Speaking to The Financial Express on why Renault chose India for manufacture of tractors, Renault Agriculture chairman and managing director Bruno Morange said Renault saw India as the biggest market for tractors in the world within the next 10 to 15 years. The skill sets available in India are much better than those available in the neigbouring countries, he said.