NEW DELH - Tata Motors, India's largest vehicles maker, is keen to sell a stake in its financing arm, a senior official said on Tuesday.

We are looking at various options of offloading stake, Vice Chairman Ravi Kant told reporters.

The company has been divesting holdings in group firms to raise funds. Last year, it sold some stake in group firm Tata Steel to pay down debt for its Jaguar and Land Rover acquisition.

Earlier, the Mint newspaper had reported that India's largest lender, State Bank of India, may take a 49 percent stake in Tata Motors Finance.

The company is also expecting a rise in prices of commercial vehicles.

It can go up by 1-2 percent. New emission norms require new technologies, therefore prices will have to go up, said Ravi Pisharody, the commercial vehicles head.

Defense

Tata Motors also said it had bid to supply 1,000 bullet-proof vehicles to the Indian army for a total value of 3.5 billion rupees.

The company said it was offering a range of defense products, including combat vehicles and troop carriers.

The company will be competing with local manufacturers such as utility vehicle maker Mahindra & Mahindra and trucks and bus maker Ashok Leyland for defense contracts.

Under a new policy last year, India allowed domestic firms to bid for large defense contracts and officials have estimated the market has a potential size of $100 billion over the next 10 years.

Last year Mahindra had said it would bid for domestic defense projects worth $3.5 billion over seven years, supplying artillery systems and armored vehicles.

It has tied up with England's BAE Systems for its land-based defense systems.

At 2:31 p.m. (0901 GMT), shares in Tata Motors were trading up 1.9 percent at 695.20 rupees in a firm Mumbai market.

(Reporting by Sanjeev Chaudhary; Writing by Janaki Krishnan)

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