Sources said exports to Europe may commence only in the next fiscal as the present Indica engine would not conform to their emission standards which will come into effect from January 1, 2001.

"Tata Engineering would need to upgrade Indica engines with appropriate technology so as to meet Euro III norms which will come into effect from January 2001 in Europe," a senior Tata Engineering official told The Financial Express.

Almost all car companies in the world are eager to offer technology to companies whenever there is demand, he added.

It is not known whether the foreign major would also pick up an equity stake in the Tata Engineering car project, if hived off, at a later stage.

The official did not give further details of the negotiations with global majors.

Experts pointed out that Tata Engineering's tie-up with one or more foreign majors for engine technology makes sense as the Indica may able to make inroads in the highly-competitive European market. Also, Tata Engineering may also launch the foreign company's models in the country to widen its range.

The company feels that Indica, with its international looks and sporting a high-tech engine, will be more successful in the European market. Europe would be one of Indica's major markets in the next few years.

Tata Engineering has not undertaken any significant exports of the Indica since it was launched. The Indica has been exported to the European island country of Malta with over 500 units of the diesel version shipped in 1999-2000. There were also plans to export Indica to the southern European markets of Italy, Spain and Portugal. But the company has not undertaken any exports to these countries till now.

As regards the domestic market, the Indica car project is expected to break even with sales of 90,000 units as against the earlier expected 60,000 units.

Recently, stock markets and financial circles have been rife with reports of Tata Engineering hiving off the Indica project and offering an equity stake to a foreign major.