Negotiations have already been initiated between the two partners and talks are on an advanced stage, sources close to both the companies told UNI here.

However, the particular models to be introduced under the venture, equity distribution and nature of arrangement between Peugeot and Hero are being finalised, the sources added. Once the modalities of the tie-up are finalised, Peugeot would approach the Foreign Investment Promotion Board (FIPB) for its final approval for setting up the project.

It may be recalled that Peugeot had recently pulled out of its car-making joint venture in India -- PAL-Peugeot -- citing differences with partner Premier Automobiles.

Hero Motors, the sources said, would not be pursuing the idea of manufacturing Peugeot's famed passenger cars through its venture.``Our core competency is two-wheelers and we intend to concentrate on these. Four-wheelers are out of question for us.''

Hero Motors managing director Pankaj Munjal, when contacted, confirmed the move but refused to divulge any details saying that discussions are still on. ``We are not at a stage to talk about the venture now.''

Back home in France, Peugeot is engaged in the business of manufacturing a range of automobiles, beginning from bicycles, scooters, motorcycles to cars, all-purpose vehicles and vans.

Peugeot produces its range of bikes through Peugeot Motocycles, which is a subsidiary of the parent PSA Group and is independent of Automobiles Peugeot.

The Peugeot range of premium scooters currently available across the globe include renowned brands like Speedfight-M, Speedfight-100, LCD, LCDP and M, Zenith-N, LN and LS, Trekker Road, Treker Off-road, Trekker-100p and Elyseo-50 and 100.

This venture would also mark Hero Motor's foray into the premium scooter segment. It had earlier thumbeddown a proposed venture with Piaggio SpA of Italy to produce premium scooters. These products would be targeted at both domestic and foreign markets, the sources added.

Though both Hero and Piaggio had refused to cite any reasons for the same, sources said, ``In the wake of the ongoing tiff between Piaggio and the Singhania family, the fate of the new venture was very uncertain, which forced Hero Motors to call off the project.''

The scooters, which would be produced under the Hero-Peugeot venture, would sport the Briggs and Stratton engines. Hero Motors had recently tied up with Briggs and Stratton of the US, to set up a 50-50 joint venture for producing high quality four-stroke engines for two- and three-wheelers.

The joint venture company was set up with an installed capacity of producing 2,00,000 powertrains per annum. The main focus of the Rs 80 crore project was to capture a sizeable share of the world market, particularly Western Europe and South America.

The project had initially envisaged anindigenisation level of 99 per cent from the first year of operations.

Besides, Hero Motors has also decided to roll out three new products soon for the rural market, the semi-urban market and the international market. These products -- the Super Shakti, SL and SLX -- will be priced at Rs 20,000, Rs 25,000 and Rs 35,000 respectively. They are a product of Hero Motors' in-house research and development facility.