China’s state-owned Chery Automobile Co. Ltd is in advanced discussions with Tata Motors Ltd for a potential alliance for the Indian market, underscoring moves by Chinese companies to expand into the world’s fastest-growing major auto market.

The nature of the partnership—a joint venture, retail sales tie-up or technology sharing—and the time for Chery’s entry into India is yet to be finalized, said a person aware of the development, requesting anonymity.

“Senior management of Tata Motors was in China this year and they did visit the facilities of Chery as well. A return visit by Chery’s senior executives to India is also on the cards in the next few months. Most of the leading Chinese companies are looking at the Indian markets since the potential is huge and India is the only market projected to grow significantly in the long run," said the person.

Tata Motors’ Jaguar Land Rover unit and Chery have an equal joint venture in China since 2012, with a plant in Changshu. Chery is one of China’s top automakers, while Tata Motors is India’s fourth largest passenger vehicle maker.

The person cited above said Chinese automakers don’t understand the mindset of Indian customers as much as their Japanese rivals do. So, even if they are interested, it is important to have a local partner to help them understand the market, said the person.

A Tata Motors’ spokesperson said, “This is highly speculative and we do not comment on market rumours." Chery could not be contacted for comment.

In 2017, The Economic Times reported, citing Chery chairman Yin Tongyao, that his company may explore entering India with or without partnering Tata Motors.

With auto sales in China expec-ted to stagnate in the coming years, major companies there are looking to expand to India. China’s SAIC Motor Corp. Ltd-owned British brand MG Motor will launch its first product in the next few months, while Great Wall Motors has formed a team to set up independent operations in India. State-run Changan Automobile Co. is also exploring opportunities in India.

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