The Indian government has allowed the Japanese auto makers Toyota and Suzuki to take a greater stake in the country's car industry.

Toyota has received the go ahead to raise its ownership of Toyota Kirloskar Motor India, maker of multi-utility vehicles, to 99% for 1.06bn rupees.

Meanwhile Suzuki has been allowed to take a majority stake in Maruti, India's largest car maker, which it currently jointly owns with the government.

And Suzuki is also set to invest 470m rupees to start producing motorbikes in India.

The country is the world's second largest motorbike market, and last year Suzuki pulled out of a joint venture to make motorbikes with India's TVS group.

Auto dealers

Pradip Baijal, secretary of the ministry overseeing privatisation, said negotiations with Suzuki were at an advanced stage as part of the 4bn rupee Maruti public share offering.

The government's sale of its 50% stake in Maruti is expected to be completed by the end of the month.

Three years ago, Maruti controlled 80% of the Indian small-car market, but this slipped to 60% following competition from Hyundai, Ford and Toyota.

The deals are among 57 foreign investment proposals worth 11.1bn rupees cleared by Commerce and Industry Minister Murasoli Maran.