According to Dave Osborne, national secretary for the union, the “members’ long-term future is best served by Tata.” The Unite union represents about 12,000 workers at Land Rover and Jaguar factories.

Tata Motors, which had outbid Mahindra & Mahindra and One Equity with a $2 billion-plus offer, has assured the union officials that it will continue to source engines and other components manufactured at Ford’s British manufacturing facilities which are in south Wales and Dagenham in London and that there will be no layoffs.

“We do believe that Tata Motors, in the event of a sale…offers the best alternative for our people in the UK,” Osborne said. “It’s a cash-rich company. It’s got experience in manufacturing in the automotive industry. It’s got a substantial presence in other industries in the U.K.”

“They (Tata) totally ruled out offloading Jaguar or building Land Rovers in India,” Osborne said, adding that Tata has agreed to keep employment in the UK around the current 15,300.

According to Osborne, Tata has also agreed to stick with the Jaguar-Land Rover business plan through 2011. After that, the Indian automaker has expressed interest in growing the company and even adding workers in the UK, he said.

“The manufacturing footprint will remain unaltered,” he said. “The engineering and design studios will remain. There’s no plans outside of the business plan to source any more components from low-cost economies.”

Osborne said Tata is confident in the British automakers, despite challenges of meeting new carbon dioxide emissions standards in Europe. There is growth potential in emerging markets, he said.

“There seems to be a relative air of confidence from the company rather than talk about reductions in employment levels post-2012,” he said.

According to Roger Maddison, national officer of Unite, “the sooner everything goes through, the better,” as “the workforces are beginning to get anxious.”

Tata has agreed to meet the guarantees sought by the union workers, Maddison said.

The Indian automaker is also expected to take over the pension liabilities, he added.

“Everything seems fine as far as we are concerned; it’s just the lawyers working on it now,” Maddison said.

Meanwhile, sources close to the deal said Ford’s discussions with Tata was constructive and progressing forward and that a conclusive agreement is expected as soon as early March.

The announcement of the sale may come on the sidelines of the Geneva Motor Show which will commence on March 4, the sources said.

Ford, which competes with General Motors Corp. and Toyota Motor Corp., the world’s two largest automakers by sales volume, bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.7 billion in 2000, joining them with Aston Martin and Volvo to form its Premier Automotive Group.

However, the No.2 US automaker, Ford, which has struggled with declining US sales and falling market share for the past few years, has been exploring the sale of Jaguar and Land Rover since last June.

Last year Ford completed the sale of its controlling stake in Aston Martin for $931 million in cash and preferred stock.

Once Jaguar and Land Rover are sold, Ford’s only European luxury brand will be Sweden-based Volvo. Ford has said it wants to return that unit to profit.

In a separate development, Tata Motors has mandated several local and foreign banks to raise nearly $2.5 billion – mostly from overseas.

While most of the money raised will be used to fund the purchase of Jaguar and Land Rover from Ford, the remaining funds may be used to finance capital expenditure of Jaguar and Land Rover following the acquisition, and also on the production of Nano, the world’s cheapest car, which Tata Motors plans to commercially launch in October.

Tata Motors, India’s third largest maker of passenger vehicles and largest maker of commercial vehicles, is a part of India’s most respected business conglomerate, the Tata Group, which has business interests that include steel, automotive, technology, consumer products, energy, hospitality and beverages.

The Tata Group reported revenues in 2006-07 of $28.8 billion, about 3.2 percent of the country’s GDP, and a market capitalization of $66 billion. The group has 27 publicly listed enterprises and operates in more than 80 countries across six continents, employing over 300,000 people.

Ford expects significant fuel economy improvements with the 2010 Mustang GT and improved horsepower over the current version that gets about 22 miles per gallon on the highway. But it will still be gas-thirsty.

Ford and fellow U.S. automakers General Motors Corp and Chrysler — which is owned by private equity firm Cerberus Capital Management LP — were in Washington on Tuesday to plead for a $25 billion U.S. government bailout package.

Detroit’s Big Three have suffered plunging auto sales as consumers have abandoned their bigger, gas-guzzling sports-utility vehicles, pickup trucks and minivans. The credit crunch has further hurt sales, as many consumers have found auto loans increasingly hard to obtain.

But Ford’s unveiling of the Mustang, ahead of an auto show in Los Angeles, was a sign that at least one of the three major U.S. automakers was pushing ahead with its basic program of building cars.

The new Mustang, a 2010 model year revamp from the Pony emblem on the front to sequential turn signals on the rear taillights, brings modern touches to the last major redesign that brought back familiar shapes from its 1960s origins.

“The design is very recognizable as a Mustang and yet everything is new,” said Peter Horbury, Ford’s executive director of design for the Americas.

“You ought to be able to see this car 100 yards down the road at night and know what it is,” Mustang chief designer Doug Gafka said.

Sales of the current Mustang, which can be found in various V6 and V8 coupes and convertibles, have been sagging and the new version is aimed to spark renewed interest in the muscle car. Mustang sales were down nearly 30 percent in 2008 through October at 83,557. The new version will be available in 2009.

Ford has built the Mustang continuously for 45 years and believes the new version will have notably better handling.

The No. 2 U.S. automaker also aimed for significant improvements in the interior, adding a soft instrument panel, improving the fit and finish of materials, and adding advanced electronics options.

The move by Tata, which bought the luxury carmaker earlier this year for $2.3 billion (1.5 billion pounds) from Ford, comes on top of “hundreds of millions” of working capital it has provided to the British firm, the paper said citing sources close to Tata.

Tata Motors, reached by Reuters in Mumbai, had no comment on the report, but analysts said pumping money into Jaguar Land Rover would strain Tata Motors’ finances.

Car makers around the globe have been hit by a collapse in demand as the economic slowdown spreads and access to credit is choked off by the financial crisis.

The Times newspaper reported on Monday that the prospect of British government assistance to help keep Jaguar Land Rover afloat had helped the company’s owners to secure last-minute funding from the banks.

It quoted senior figures in the British civil service as saying that British Prime Minister Gordon Brown, Chancellor (finance minister) Alastair Darling and Business Secretary Peter Mandelson had agreed that assistance for Jaguar would be necessary to prevent its collapse.

A spokesman for Britain’s Department for Business, Enterprise and Regulatory Reform told Reuters: “The government stands ready to help companies in the current difficult economic circumstances but does not have an open cheque book.

“The government has been in regular contact with Tata over Jaguar.”

Last week Mandelson confirmed that he had held talks with Jaguar Land Rover, which he said was under “particular strain”.

Brown said on Friday the government wanted to help the car industry through the economic downturn but the main responsibility lies with the carmakers’ owners.

Trades unions have called on the government to step in to save an industry employing tens of thousands directly and indirectly through suppliers.

The United States last week announced a $17.4 billion loan package to rescue its stricken auto makers.

The Canadian government put up an additional $3.3 billion in emergency loans a day later.

TATA STRAIN

Analysts said any injection of funds by the top Indian vehicle maker would strain its finances. Tata Motors has already struggled to pay off a $3 billion bridge loan it had taken to fund the Jaguar and Land Rover brands.

“Debt funding is not a good option as it has to service that debt and it already has a high debt to equity ratio,” said India Infoline’s auto analyst Jatin Chawla.

Funding options for the company include leveraging the loans it has given to dealers and buyers and also using the group’s assets to raise finance, analysts said.

Earlier this month Standards & Poor’s lowered the company’s corporate credit rating to BB- from BB and placed it on credit watch with negative implications.

Tata Motors is raising about $540 million through term deposits, which analysts expect would also be used to repay the loan. Last October the company’s founders had to come to the rescue of an $850 million rights equity issue which was inadequately subscribed by shareholders.

However, shares in Tata Motors were trading up 4.7 percent on expectations that falling interest rates could boost demand for its vehicles and also on hopes that the UK government would provide assistance to Jaguar Land Rover.

Tata Motors, which has a market value of about $1.5 billion, has dropped 74 percent so far this year while the main index is down more than half.

(Reporting by Janaki Krishnan and Kazunori Takada; Additional reporting by David Milliken in London; Editing by Ranjit Gangadharan and Lincoln Feast)