Mumbai: Nippon Steel Corporation followed its two largest Japanese rivals in forging Indian automobile steel ventures to tap surging demand in Asia's third-biggest car market as domestic sales decline.

Nippon Steel, the world's second-largest steelmaker, agreed on Thursday to invest as much as 35 billion yen (Dh1.42 billion) with Tata Steel Limited to make auto-grade steel in India by March 2013.

JFE Holdings Incorporated, Japan's No 2 steelmaker, said in November it will cooperate with Mumbai-based JSW Steel Limited, while Sumitomo Metal Industries Limited said last month it may buy a stake in Bhushan Steel Limited's proposed mill in eastern India.

Car sales in India grew at the fastest pace in three years in 2009, as Japan's auto market contracted to a 32-year low. Having Indian partners allows the steelmakers to skirt government delays, said Bharath S., an analyst in Chennai at Sundaram BNP Paribas Mutual Fund.

"This is the easy way out for all companies who want to be in India and are aware of the practical problems here," he said. "You will hear of more global companies wanting to pick up stakes in the India growth story." Sundaram BNP holds 1.31 million Tata Steel shares, according to Bloomberg data.

Tata Steel, Steel Authority of India Limited, and JSW Steel raised prices this month on higher demand.

Higher material costs prompted Maruti Suzuki India Limited and the Indian unit of Hyundai Motor Company to increase prices of some of their cars.

On a Roll

Ford Motor Company and Volkswagen have also expanded factories and introduced new models.

"India's automobile industry is on a roll," Tata Steel Managing Director H.M Nerurkar said in an interview on Thursday in Mumbai.

India's $1.2 trillion economy may expand 6.9 per cent in the year ending March 31, according to the median estimate of a survey conducted in December of forecasters such as the New Delhi-based National Council of Applied Economic Research.

ArcelorMittal, the world's largest steelmaker, and South Korea's Posco, Asia's most profitable mill, have failed for the past four years to buy land to build plants in the eastern states of Jharkhand and Orissa that would have more than doubled India's production.

Luxembourg-based ArcelorMittal bought a 5.6 per cent stake in Uttam Galva Steels Limited in September, after failing to secure land for two $10 billion factories in the country.

Bridgestone to invest in India

Japanese tire maker Bridgestone Corporation said a unit in India will begin production of radial tires for buses and trucks in the first half of 2011. Total investment will be 3.3 billion yen (Dh134.4 million), for daily production of 400 units, Tokyo-based Bridgestone said in a release on its website.