Mahindra & Mahindra said on Thursday it was in talks to assemble and sell sport utility vehicles in China, in what would be the first foray by an Indian automaker into the fast-growing Chinese market.

India's largest maker of tractors and utility vehicles spent a week negotiating with a trio of Chinese firms to put together and distribute its Scorpio sport utility vehicle, the company's managing director Anand Mahindra said in Shanghai.

PM in China: Complete Coverage

Mahindra was accompanying Prime Minster Atal Bihari Vajpayee on his landmark trip to China, joining a corporate delegation that hoped to forge business ties and cash in on China's booming market as the two Asian neighbours improve trade relations.

A team from the Indian vehicle maker had spent the past week discussing possible deals, Mahindra said, although he declined to elaborate on possible partners or other details.

"They have been talking to about three automotive companies about the potential of collaboration here, and for assembling and distributing our sport utility vehicle, the Scorpio," he said.

"A year from now, hopefully we should be in action here," he added, when asked when the Scorpio might go on sale in China.

India houses just a handful of domestic vehicle makers, including Maruti Udyog Ltd and Tata Engineering and Locomotive Company. None is active in China.

Mahindra & Mahindra, for decades the undisputed leader in Indian utility vehicles, has seen its market share shrink to 51 per cent from more than 90 per cent since economic reforms in the 1990s galvanised rival truck maker Telco, a unit of the Tata group.

Mahindra's company launched the Scorpio in June 2002.

Some auto executives predict China's SUV market will double to more than 120,000 vehicles by 2010, powered by rising incomes and steady economic expansion.

Mahindra added that the Scorpio, designed by an India-trained engineer, would be marketed in Europe soon.

In China, the Scorpio would compete with Ford's Maverick, General Motors' Chevrolet Blazer and the Pajero, made by Mitsubishi Motors and Daimler Chrysler.

Ties between India and China, the two most populous nations in the world, are warming. This week, they pledged to move forward in settling a lingering border dispute and to accelerate trade.

Mahindra & Mahindra's stock closed down 5.5 per cent at Rs 135.50 on Thursday.