TOKYO: Japan's leading steelmaker Nippon Steel is planning to enter the booming Indian market through a tie-up with the country's major conglomerate Tata, a newspaper said Tuesday.

Nippon Steel, the world's second largest steelmaker after the new Arcelor-Mittal behemoth, would be the first Japanese steelmaker to produce steel in India.

The Japanese company is in talks with Tata Steel to produce steel sheet for Japanese automakers operating in India as early as 2010, the Nikkei business
daily said, quoting company officials.

"We are considering a wide range of joint operations with Tata Steel in India, with co-production of steel sheet for cars looking promising," Nippon Steel president Akio Mimura was quoted as saying.

Tata Steel Managing Director B. Muthuraman told the Nikkei that he was "optimistic" about the talks' progress.

The two firms are expected to invest about 50 billion yen (US$430m) in a plant for thin sheet for car bodies, with annual output capacity of one million tons, it said, adding that the location was not yet decided.

Japanese automakers have been stepping up their presence in India, which is posting rapid macroeconomic growth. Suzuki Motor Corp holds a majority stake in Maruti Udyog, India's largest carmaker.

But Japanese automakers in India are still largely dependent on imported high-end steel, particularly from Japan and South Korea.

A Nippon Steel spokesman declined to comment on the report.

The Japanese firm has been looking to extend alliances since Mittal Steel, a Dutch-based company founded by Indian-born mogul Lakshmi Mittal, completed its massive and controversial takeover of rival Arcelor.

Nippon Steel shares rose on the report.

The company's shares on the Tokyo Stock Exchange were up 14 yen or 1.62 per cent at 877 yen at the lunch break while the benchmark Nikkei-225 index was down 0.12 per cent. - AFP/na/yy