The joint venture, to be named Mahindra International Engines Ltd. (MIEL), will be 51% owned by Mahindra & Mahindra (M&M) and 49% owned by Warrenville, Ill.-based Navistar, North America’s largest combined commercial truck, school bus and mid-range diesel engine producer. The combined investment of the two companies will be $90 million over the next five years.

This marks the second such joint venture for Navistar with M&M, following a 2005 JV that today makes light, medium and heavy commercial vehicles for India and export markets. The new company’s advanced diesel engines will power the full line of trucks and buses produced by the preceding JV beginning in 2009. Engine components will be sourced locally, going up to 85% within two years.

Mahindra International Engines Ltd. will build a new plant in India, with production start-up targeted for April 2009. Initial capacity of the greenfield site is projected to be 25,000 units per year, ramping up to 40,000 per year within five years. The first production engine will be a 7.2-liter, in-line design.