Tata Motors-controlled Jaguar Land Rover and China's Chery Automobile Co are seeking regulatory approval for a 17.5 billion yuan ($2.78 billion) car venture in eastern China, two people with direct knowledge of the deal said on Monday.
The venture, to be located close to Shanghai in Changshu city, will make Land Rover SUVs initially, followed by Jaguars in the second phase, one said.
"The plan is still subject to the approval of the National Development and Reform Commission at this state. The size of the investment could be adjusted accordingly," the other source said.
The venture is also subject to approval from other government bodies.
Both sources declined to be named because of the sensitive nature of the proceedings.
JLR had previously explored joint venture deals with other Chinese partners, including Great Wall Motor Co. A Tata Motor spokesman declined to comment on the Chery tie up. Chery executives could not immediately be reached.