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Renault Agriculture ties up with ITL

Renault Agriculture, a subsidiary of French auto firm Renault, announced Wednesday a partnership with India's International Tractors Limited to produce tractors in India and jointly market their products abroad.

Under the agreement, Renault Agriculture will acquire a 20 per cent stake in ITL and transfer the license to build its CERES model tractor in India.

The two firms will also set up a joint venture to market their respective products in countries outside South Asia and Europe.

The French company will hold a controlling 60 per cent stake in the joint venture -- Renault Sonalika International -- and ITL the remaining 40 per cent.

According to a Renault Agriculture official, the acquisition of the 20 per cent equity in ITL will cost around 80 million francs ($11.4 million).

India's tractor market is one of the largest in the world at roughly 260,000 units a year.

ITL, which has targetted a 15 per cent market share by 2010, hopes the tie-up with Renault Agriculture will help fend off the challenge posed by the entry into the market of US manufacturer John Deere and New Holland, a member of Italy's Fiat group.