Renault-Nissan Alliance and Bajaj Auto have signed an agreement to manufacture an ultra low-cost car to be sold in India and other emerging markets.

Renault-Nissan said they would launch the car in India in 2012 along with Bajaj. The car would rival Tata Motor's Nano, the world's cheapest car.

The design, manufacturing and sourcing for the car would be done by Bajaj while Renault-Nissan would handle marketing in India and overseas, the companies said.

India, along with China, is one of the few bright spots for the automobile sector, while recovery in the United States and Europe continues to be unsteady. Global car makers are queuing up to invest in India to tap growth.

Earlier this week, Toyota Motor Corp said it would invest about 9 billion yen ($103 million) to produce engines and transmissions for its compact car Etios in India.

The compact car segment is about 70 per cent of the total passenger car market in India. India's top carmaker Maruti Suzuki is the undisputed leader in the segment with brands such as the best-selling Alto, Swift and Ritz hatchbacks.

General Motors' Beat, Ford's Figo and Volkswagen's Polo hatchback were some of the new launches this year in the compact segment. Toyota's Etios is expected towards the end of the year.

Renault, which had a joint venture with India's Mahindra & Mahindra for the Logan sedan, bailed out from the loss-making venture in April by selling its stake to the partner, and is expected to focus on other projects in India.-Reuters