The Board of Tata Steel Ltd on Friday at its meeting in Mumbai decided to also look at alternative and sustainable portfolio solution including a joint venture for its European business which it was looking to sell off earlier.
In a statement, the company said: "Consequently, Tata Steel has now entered into discussions with strategic players in the steel industry, including Thyssenkrupp AG.
Discussions have been initiated to explore the feasibility of strategic collaborations through a potential joint venture.
"However, the talks are currently at a preliminary stage and there can be no certainty of a transaction as the outcome depends on consultation and negotiations with various stakeholders. "
Koushik Chatterjee, Group Executive Director and Tata Steel's Executive Director for Europe, said: "We have initiated conversations for a strategic collaboration for our European business.
A potential strategic combination of strip products businesses offers the best prospects to create a premium, world - class strip steel business with the scale and scope of capabilities to compete successfully on the global stage. "
"It is too early to give any assurances about the success of these talks.
Such success, especially the inclusion of the UK business in the potential joint venture, would depend on several issues including finding a suitable outcome for the British Steel Pension Scheme, successful discussions with the UK trade unions and the delivery of policy initiatives and other support from the Governments of the UK and Wales.
These are necessary for realising a sustainable business in the UK, " he added.
According to him, as a part of this development Tata Steel will now also begin to separate processes for the potential sale of the South Yorkshire based speciality steels business and the Hartlepool pipe mills (other than the 20 - inch tube mill) in Britain.
"Both of these operations are largely independent of the strip products supply chain with their own specific characteristics.
Tata Steel UK has already received interest from several bidders for Speciality Steels and the pipe mills in each case and a formal process will be commencing shortly, " Chatterjee added.
Hans Fischer, CEO of Tata Steel Europe, commented: "This is a welcome development, not just for Tata Steel but also for the European steel sector more broadly.
Although there's much work still to be done on any strategic collaboration I'm confident that the direction is the right one - towards higher performance and capability to serve customers.
We will continue to communicate with our employees and inform and consult both works councils and trade unions as these discussions develop. "
Earlier in the day, British Business Secretary Sajid Javid on Friday met Tata Sons chairman Cyrus Mistry along with Tata Steel top brass on the issue of the company's proposed sale of its steel assets in Britain.
"Just finished meeting with Tata Steel in Mumbai.
Now off to Delhi for talks on UK/India trade, " Javid said in a tweet.
On March 29, Tata Steel had announced it would explore strategic alternatives for its British business, including its potential sale as a whole or in parts.
The company and its advisers then contacted around 200 potential financial and industrial investors around the world to explore their interest in the business.
The company has also deeply engaged with the governments of Britain and Wales at every stage of the process.
On May 9, seven expressions of interest were taken forward to the next stage of a possible sale process.
The seven companies were given access to extensive business information and management team presentations in order for them to progress their interest and submit refined bids, the statement said.
Bidders were engaged in detailed discussions with the Tata Steel Europe management.
The bids received have been carefully considered in detail on the basis of their commercial value and prospects for the future sustainability of the British business for a range of stakeholders.
The bids have also been reviewed in the light of the uncertainties caused by the British referendum and the outcome of the British government's consultation on the British Steel Pension Scheme.
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