The companies will invest $8.5 million over the next three years and a total of $27 million over 10 years in the joint venture, HMC-MM Auto Ltd. Hero will hold 60 per cent stake in the venture, while the remaining will be with Magnetti Marelli.
Pawan Munjal, managing director and chief executive, Hero, said, "This development will help the cause of Hero engines, improve our products and help meet environmental regulations."
He added the venture would start manufacturing by the end of next year and was targeting $200 million in turnover in 10 years.
The venture might also supply components to other manufacturers, Munjal said.