Yahoo is hoping to profit from growing internet usage in India

The FT said the US search engine was discussing a tie-up with Bennett Coleman, the publisher of The Times of India newspaper and other titles.

The publisher is looking for a partner to develop its online services, a move which may lead to a US flotation.

Yahoo is keen to expand in India where internet usage is growing fast.

Potential funders?

Bennett Coleman separated its internet operation from the rest of the business in 2000, listing it separately on the Indian stock market.

Indiatimes is one of the country's most popular internet portals, attracting more than a billion monthly page views.

The FT reported an executive with Bennett Coleman as saying that the company hoped to conclude discussions within the next month.

However, he said the company was also talking to other sources of potential funding, including private equity groups.

"An internet initiative requires plenty of investment and since we hope to take our portal to the Nasdaq, we will require support," he said.

Both Bennett Coleman and Yahoo declined to comment on the report.

Yahoo has a research & development operation in Bangalore and an embryonic partnership with Indian online business, rediff.com.

The Times of India is Bennett Coleman's best known title.

Originally launched in 1838, the English language daily has a circulation of more than 21 million.