According the sources, Mahindra's approval for the submission is one step towards to become a major global utility vehicles maker.
The company was willing to pay up to $400 million for Ssangyong, added the source.
Mahindra, India's largest utility vehicles maker, is among six bidders short listed for cash-trapped Ssangyong.
Renault-Nissan alliance and Kolkata-based Ruia group were among the other bidders.
Ssangyong, which has been under court-led restructuring since early 2009, is the fourth largest South Korean automobile manufacturer.