Indian industrial group Mahindra & Mahindra has pulled out of the race to buy Jaguar and Land Rover, it has emerged.

It is thought the Indian utility vehicle maker was concerned about the supply of engines from Ford if it was able to make the acquisition.

Fears were also raised about the ability of the Jaguar and Land Rover to meet the proposed 130g per km C02 limit which could be imposed by the EU from 2012.

Mahindra's exit leaves only its compatriot Tata among the trade bidders for the two companies, which have been put up for sale by parent company Ford.

A team from Mahindra had visited the factories in Britain and had been a part of the discussions with the management.

It had been thought that Mahindra, an off-road and tractor specialist, was more interested in Land Rover rather than Jaguar, but Ford is adamant that both companies would be sold together.

Indian analysts have said Land Rover would fit Mahindra's portfolio of products better, as it would address its need for a premium SUV brand above its Scorpio SUV.

Ford has said it plans to have more details on the sale of Jaguar and Land Rover by the end of the year or early 2008.

Meanwhile, investors and motor industry analysts are questioning the business plan for a possible takeover bid by India's Tata Motors for Jaguar and Land Rover.

Chairman Ratan Tata confirmed last month that he is interested in entering the bidding against US private equity firms including TPG, One Equity Partners and Ripplewood Holdings, that each have partnered with former Ford executives.

Mr Tata said such an acquisition would help bring global visibility to his group - a large conglomerate that makes everything from automobiles to steel and software, and a name that until recently was little-known outside India.

Tata Steel made a splash in January when it won a bidding war to buy Anglo-Dutch steel maker Corus Group for £6 billion.

That deal, India's biggest foreign acquisition, highlights the country's recent outward expansion into the global economy.

But while the Corus acquisition was widely seen as a good match - and since appears to be paying off - experts don't see similar synergies in a Tata Motors takeover of Jaguar and Land Rover.

Tata, which is a giant in truck and bus manufacturing, has only about a decade of experience selling cars - and most recently, has grabbed headlines with its plan to make an ultra cheap car costing just £1,200.

The company has been successful selling into the burgeoning Indian market, which is dominated by hatchbacks and subcompacts.

Jaguar and Land Rover are luxury brands that cater to a small percentage of customers and have a limited distribution network.

What Tata needs more, if it wants to reduce its dependence on Indian buyers, is a large overseas sales network that targets the mass market, experts said.

Morgan Stanley analyst Balaji Jayaraman called such an acquisition "value-destructive given the lack of synergies and the high-cost operations involved," in a note to clients.