Renault has invited Bajaj Auto Ltd to join a $1 billion manufacturing alliance with

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partner Nissan Motor Co, a Mumbai-based business daily reported on Thursday, citing unnamed industry sources.

Renault and Nissan, which are developing a $2,500 car with motorbike maker Bajaj, are also negotiating with the Indian firm to extend their venture to distribute the Renault and Nissan vehicles that will be made in Chennai, the paper said.

Bajaj Auto's managing director, Rajiv Bajaj declined comment, the paper said.

A spokesman for Renault in India was not immediately available for comment.

Renault, which makes the no-frills Logan sedan in a venture with utility vehicle Mahindra & Mahindra Ltd, had previously agreed to distribute the Renault/Nissan vehicles through the venture with Mahindra.

Mahindra earlier this year pulled out of the manufacturing alliance with Renault and Nissan in Chennai, which will start production in 2010 and will have a annual capacity for 400,000 vehicles in seven years.