Tata is seeking to become the principal strategic partner for MG Rover of the UK, developing jointly both new models and major components such as engines and transmissions. Ratan Tata, the Indian group's chairman, told the Financial Times that Tata regards an agreement to provide MG Rover with a new small car, which MG Rover will sell for £6,000 ($9,600) in the UK, as potentially only the beginning of a much deeper relationship.

Tata also put on display at the Geneva motor show an estate version of its small sedan, the Indigo, as well as larger sports-utility vehicles, the Safari and Sumo. Tata believes that they could fill further market niches cheaply for MG Rover. Senior MG Rover executives at the show declined to be drawn on the prospects for a strategic partnership with Tata, although they described the relationship so far as "progressing positively".

The current deal also gives MG Rover non-exclusive rights to sell vehicles in Europe, although Tata will retain its own existing sales networks. The small car, to be badged as a Rover but based on Tata's domestic-market Indica, will go on sale in September. Planned volumes are higher than indicated previously. Under the agreement, Tata will provide upto 170,000 units over the next five years. It is clear that Tata regards itself as a potential replacement partner for China Brilliance, the Chinese automotive group with which MG Rover signed a partnership agreement more than a year ago.

That pact provides for both market and model sharing, with its most important element being the joint development and production of a lower-medium hatchback one size up from the Indica to replace MG Rover's current Rover 25 and MG ZR models. Despite China's Liaoning provincial government seizing control of Brilliance in December, after its chairman, Yang Rong, was accused of economic crimes, MG Rover executives say the pact is still in place.