Telco's executive director VM Raval told The Financial Express: "What Telco is looking for in the long-run is essentially import of technology. The company will have to continuously upgrade its product range over time and that is when such strategic arrangements will be required."

Raval added that the company was also keen on production sharing arrangements with global majors. "Worldwide in the auto sector it is a common phenomenon. We could arrive at an arrangement where, may be, our products will be marketed by our ally and Telco, in turn, will market our partners models under their respective brands."

Senior company officials said that at this point Telco was not in negotiations with any global auto major, including the German-American auto giant Daimler-Chrysler which has a 10 per cent stakein the Tata group major.

Telco presently has a joint venture with Daimler-Chrysler in India, Mercedes Benz India, which manufactures the top-of-the-line Rs 26 lakh-plus Mercedes Benz E Class. Telco has reduced its stake in the venture to around 14 per cent.

Company officials also did not see Daimler-Chrysler's holding a stake in Telco acting as a hindrance to forging an alliance with a global auto major. "In some countries you will find that even Ford and General Motors have formed similar alliances," they said.

Chairman Ratan Tata had said in the company's annual report that it should be possible for Telco to remain competitive at the low end of the car market but in the long run it might be difficult to match new model introductions or widening the present portfolio in line with international manufacturers.

"It may, therefore, conceivably be worthwhile at some stage to establish alliances with international component manufacturers and even car manufacturers to adopt specific new technologies in itsproducts," Tata had said.

The group has already set up Tata Autocomp (Taco), a holding company for the group's foray into auto components, and tied up with several international players.