"We will set up a so-called self-navigation business conference so that we can discuss what measures we need to take," a land and transport ministry official said, adding that they have yet to set the agenda.
The Nikkei business daily said the government will invite Toyota, Nissan and Honda as well as Panasonic and Hitachi to the meeting, which will look at jointly developing parts and technologies related to self-driving.
The project will also involve the University of Tokyo and Nagoya University, with their research institutes handling analyses of data, the newspaper said.
Prime Minister Shinzo Abe will include measures on the project in his growth strategy plan, expected to be announced around June, the daily said.
As a first step, auto parts makers will standardise software for self-control navigation and for sensors that detect obstacles while driving so that they can cut development and production costs, it said.
Common technology for communication links will also be targeted to guard against accidents caused by hacking the paper reported.
Currently, Japanese auto parts makers lag behind Bosch in sensors, with the German giant supplying western as well as Japanese carmakers, the Nikkei said.
The public sector will help in developing infrastructure, so that traffic and accident information can be communicated from on-road systems, it said.
The private and public sectors may invest JPY 10 billion ($84 million, roughly Rs. 5,203 crores) or so to build test courses, a focal point in international competition, it added.
The scheme is part of a government initiative to support domestic industries related to self-driving technology, as competition in the field intensifies globally.
European, Japanese and US automakers are aiming to commercialise self-driving cars by around 2020, with global behemoths including Daimler and Google in play.
Japan is concerned that if US and European rivals lead in developing the industry standards, that could put Japanese counterparts at a disadvantage, the Nikkei added.
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