Chennai: Auto major Ashok Leyland, part of the Hinduja group, and the U.S.-based agriculture and forest equipment major John Deere have set up a 50:50 joint venture to manufacture and market construction equipment.

"The detailed business plans are being worked out. It will be a greenfield project and the location is not yet finalised," Ashok Leyland managing director R. Seshasayee told reporters here Tuesday.

The partners have not released any financial details of the agreement.

"The joint venture, Ashok Leyland John Deere Construction Equipment, is expected to commence production by 2010," Seshasayee added.

Initially, backhoe loaders and four-wheel drive loaders will be rolled out and later other products like dozers will be manufactured.

"The vehicles will be jointly branded as Ashok Leyland-John Deere," Seshasayee said.

"We will also supply the power train for the construction equipment rolled out by the joint venture company," he added.

The Indian market size for backhoe loaders is around 23,000 units per annum. The market is now logging double digit growth.

Asked about the fund source, Seshasayee said: "The overall investment budget includes this project."