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The two companies issued a statement follows media reports they were close to concluding a deal for Renault's proposed plans to manufacture a 3,000-dollar car.
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In it, they said they were in "preliminary deliberations to jointly understand customer requirements and business potential for very competitive vehicles in India."
"If concluded favourably, this could lead to a long-term partnership between Renault and Bajaj for the development of the business so conceived," Bajaj Auto said.
A top-level Renault team was in India last week to discuss the proposed partnership, the Economic Times reported on Friday.
India is a key development target for Renault, which launched the low-cost Logan model here in April in conjunction with the Indian group Mahindra and Mahindra.
Renault is also building a manufacturing plant in the southern city of Chennai in partnership with the Mahindra group and Japan's Nissan.
India's car market is forecast to grow by ten percent annually to reach