Tata's plans to buy UK-based carmakers Jaguar and Land Rover is being strengthened by its intention to raise $1bn through long term securities.

India's second largest carmaker is trying to draw $3bn in loans from international markets, in preparation for the acquisition, which sources familiar with the deal expect to be agreed in principle this month.

The announcement lowered shares in Tata Motors. There is concern that the intended $2bn acquisition will weaken the carmarker's equity and substantially increase its debt.

"The said funds are being raised to part-finance overall funding requirements to meet some of the strategic plans," said Tata Motors.