The two companies have signed a Letter of Intent (LoI) to form the JV, to which Eicher Motors will transfer its commercial vehicle business along with related components and design service businesses.
Eicher Motors Ltd will hold 54.4 per cent in the JV, while AB Volvo will hold 45.6 per cent. Volvo will invest a total of $350 million in the JV, of which $275 million will be in cash.
"With Volvo's strong brand recognition and financial strength and its support in products, technology and distribution we will be well positioned to further develop our brand and product offering in India," Eicher Motors' CEO and managing director Siddhartha Lal said.
The JV will be jointly managed by Eicher Motors on equal shared-control basis and Volvo will acquire 8.1 per cent stake in Eicher Motors from its promoters.