Tractor maker Sonalika on Tuesday entered into technical alliances with British automaker MG Rover and engine manufacturer PowerTrain to produce multi utility vehicles and diesel engine components, respectively with an initial investment of Rs 200 crore (Rs 2 billion) in an upcoming greenfield project.

"Our multi utility vehicle, to be produced in technical collaboration with MG Rover, will hit the road by year-end. We will also start making diesel engine components under the licence from the United Kingdom-based PowerTrain," International Cars and Motors chairman L D Mittal told a news conference in New Delhi.

Sonalika group has floted a separate entity -- International Cars and Motors --  to handle the twin projects.

The company would set up a facility in Himachal Pradesh to make MUVs and components which would be sourced by PowerTrain to manufacture Common Rail Direct injection (CRDi) engines in the UK. 

The Indian firm would manufacture diesel engine parts under the licence from PowerTrain while the technical tie-up for MUVs would be on royalty basis, PowerTrain director (commercial) Gordon Poynter said.

Declining to mention the price of the vehicle, Mittal said the HP government provided a number of tax incentives, including exemption of 20 per cent duty on MUVs which would reflect on the price tag.