According to Autocar, may provide Hero group a license to produce 110 CC engine which powers the Honda CB Twister bike from Honda in India. Hero is also planning a scooter with the same 110 cc Honda engine on the lines of the Honda Activa. Since the Hero and Honda have a long term relationship which has been recently ended, this could be a friendly deal involving some royalties or some other sort of arrangements.
Now, the 110 cc engine is a tried and tested piece of machine. The CB Twister has been selling like hot cakes, thanks to the fuel economy from the refined motor. Soon, we might see Hero launching an ultra fuel efficient commuter bike for the masses. The new Honda Activa features a 110 cc engine with 8 bhp on tap which could also feature in a Hero product in the near future.
Secondly, Hero might bring out a cruiser bike. This bike could get the 250cc engine from the Honda CBR 250R. Since, Honda does not have a cruiser bike in its Indian portfolio at the moment, a cruiser bike would make sense as Honda will not want Hero competing with them with another 250cc sports tourer in premium segment, however these news will be confirmed with time when some official statement comes up.
The engine is licensed between these two companies where the agreement ends in 2014, after which Hero can no longer user the Honda name.