"We are in talks with Nippon Steel for joint production of steel to meet rising demand from automotive sector," a Tata Steel spokesperson told PTI. The two companies are in the process of finalising the details of the venture, he added.

Nippon Steel also confirmed the discussions in a statement, but gave no details about the venture. Japanese media reports said the companies are likely to spend about $423 million (about Rs 2,000 crore) to make thin-sheet steel mainly used in automotive bodies at a jointly built plant using Nippon's technology.

The plant would be able to produce about one million metric tons of steel a year, Nikkei English News said.

The proposed facility would meet the demand from automakers, including Japanese companies like Suzuki Motor, Toyota and Honda, in India where many of these firms have set up manufacturing units to tap the growing middle class.

Tata-Nippon cooperation follows Tatas' $12 billion acquisition of Corus Group Plc, catapulting the combined entity to the fifth spot in global steel ranking with a total production capacity of 24 million tonnes annually.

The proposed agreement also assumes significance in view of the fact that group company Tata Motors is already a significant player in the Indian automobile market. Tata Motors is also making a Rs 1 lakh car, touted as the world's cheapest, to meet rising demand in the country.