In return, it will give Bajaj, the Pune-based two-wheeler maker, design and engineering support for building high-end complex engines.
Although Kawasaki has been Bajaj's technology partner for a long time, the two have ruled out joint manufacturing of Kawasaki motorcycles in India.
"We will provide all the support to Bajaj Auto. We will also look to source components from India through Bajaj," said Hideki Kikuchi, chief of design and R&D, Kawasaki Heavy Industries.
Bajaj is said to be working on high-end engines for its small car, which may be launched in 2009, and also for bigger motorcycles.
"Our partnership with Kawasaki has been very strong and we are on the verge of announcing something very big shortly," said Rajiv Bajaj, Bajaj Auto's managing director.
Bajaj is seeking the licence to manufacture a particular range of engines developed by Kawasaki.