One Equity Partners, a private equity firm, is the other bidder. However, it is not known whether One Equity will also follow suit.
According to sources close to the developments, the two Indian companies may revise their bids to $2.2 billion in the higher end of the band. An analyst from Merrill Lynch had valued the two companies at $1.5 billion.
When contacted, Tata Motors and M&M executives declined to comment.
Even as reports of dissatisfaction of dealers over the 'image issue' surfaced in Jaguar's single largest market, the US, Ford Motor Company has gone ahead with the second round of bidding.
Dealers had expressed their discord over Indian ownership issues of the two brands and backed US-based One Equity Partners for the deal.
Ford chief executive Alan Mulally had earlier stated that a sale probably would be announced late this year or in the first quarter of next year. All the three bidders were waiting for clarity on pending European Union auto emissions regulations, before the sale can go through.
Ford may look at speeding up the process of sale in the next few days due to the approaching holiday season starting December 25.
Tata Motors has recieved the crucial backing of the British Union as it believes the Tata group brings good knowledge of manufacturing expertise in addition to its experience of being within the UK region through its presence in steel, tea and other sectors.
Loss-making Ford is selling off the two marquees as it restructures its North American operations. It is expected to take a decision on its small car entry into India only after the sales of these two brands.
Ford bought Jaguar in 1989 for $2.5 billion and Land Rover from Germany's BMW in 2000 for $2.7 billion.
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