The automaker Daimler AG said Friday it has agreed to form a joint venture with India's Hero Group that will build commercial trucks for the burgeoning market in India.

Terms of the agreement were not disclosed.

The deal calls for the local production of ``light-, medium- and heavy-duty commercial vehicles for the Indian volume market.'' The companies expect to make trucks for export at a later stage.

Based in New Delhi, Hero owns more than a quarter of Hero Honda Motors Ltd., the country's biggest motorcycle maker.

Daimler said the deal should close by the end of the first quarter of 2008.

Though known for its automobiles, including Mercedes-Benz, Smart and Maybach, Daimler is the world's biggest truck maker and its brands include Freightliner, Mitsubishi Fuso, Mercedes-Benz, Western Star and Thomas Built buses.

Last year, the company said it sold more than 516,000 trucks, bringing in 31.8 billion euros (US$46.69 billion) in sales.

``The decision to form this joint venture in India marks a milestone in Daimler Trucks' overall strategy to participate in the fast-growing emerging markets,'' said Daimler Trucks chief and executive board member Andreas Renschler.

Hero Corporate Service Ltd. chairman Sunil Kant Munjal said the Indian firm would benefit from Daimler Trucks' know-how and design.

``We can benefit from Daimler Trucks' world class products and technology, and combine those with our own strengths to create winning products for Indian and other global customers,'' he said.

Shares of Daimler were down nearly 1.4 per cent to 65.74 euros (US$96.53) in Frankfurt.