Japan's Panasonic will develop a water purification system together with India's Tata Group, tapping into a fast-growing market in Asia, a media report said Saturday.

The electronics giant has developed a prototype of a device that will detoxify harmful substances in groundwater, making it potentially safe to drink, the Japanese economic daily Nikkei said.

The system, which is compact enough be carried in a small truck, has been designed to serve small rural communities in India where water-supply infrastructure is underdeveloped, the report said.

The prototype produces three tonnes of drinking water per day -- enough to supply 20 households of average size.

Panasonic, which regards water purification technology as a pillar of its new operations, and Tata will work to lower the cost to less than 100 yen ($0.95) per tonne of water, Nikkei said.

Tata, strong in the automotive and steelmaking sectors, will offer its expertise and business networks in re-examining design and procuring materials locally, the report added.

The two partners are aiming to commercialise the system by March 2019, Nikkei said.

The value of water related businesses in Asia and Oceania is projected to reach $90 billion in 2020, tripling in a decade and topping Europe as the largest regional market, the daily said citing a private think-tank.

Nearly 80 percent of the demand will be related to water supply and sewage treatment as rapid population growth and industrialisation in India, China and other emerging economies are causing severe shortages of drinking water in the region, the report said.

Japanese water treatment firm Metawater has been entrusted with the task of updating facilities for Cambodia's Phnom Penh Water Supply Authority, Nikkei said.

In China, Japanese shipbuilder Hitachi Zosen is developing low-cost sewage treatment systems for municipalities, using a technology that breaks down nitrogen with microbes, the daily added.

While European and US companies like Veolia Environment, Suez Environment and General Electric are leaders in the business of building and managing water plants, Japanese players are working to strengthen their presence in Asia by capitalising on unique competitive technologies in water purification, Nikkei said.