FRANKFURT, Germany -- Daimler AG and India's Hero Group signed contracts Monday that will see them invest more than $1.1 billion in a commercial vehicle joint venture that should start production in India in 2010.

Approval for the Daimler Hero Motor Corp. Ltd. was granted by India's government in March and a manufacturing site is being sought in one of three Indian states, the companies said in a statement.

The joint venture will produce light-, medium- and heavy-duty commercial vehicles for the Indian market to start but has not ruled out eventually exporting them to other emerging markets.

"Today is a further important milestone for Daimler Trucks and our Asia strategy," said Andreas Renschler, the head of Daimler Trucks. "In the Hero Group we have found an ideal partner."

Total investment in the German-Indian joint venture is slated to be more than 700 million euros ($1.1 billion) over the next five years, with production expected to start in 2010.

The co-chief executives will be Marc Llistosella, who directed the project on Daimler's side, and Amit Chaturvedi, currently president of strategy and business development at Hero Corporate Service Ltd.

Known for its Mercedes-Benz and Smart brands, Daimler is Europe's biggest truck maker with brands including Freightliner, Sterling and Mitsubishi Fuso. Last year, its truck unit posted revenue of 28.5 billion euros ($45 billion) with 467,667 trucks sold worldwide.

Hero Group is an Indian conglomerate founded more than 50 years ago with annual sales of $4 billion.

It operates Hero Honda Motors Ltd., a joint venture with Japan's Honda Motor Co., that has built more than 20 million motorcycles for the Indian market.

Daimler shares fell 2 percent to 49.64 euros ($78.54) Monday in Frankfurt.