India Launches 'world's Cheapest Car'

India's Tata group has announced that the world's cheapest car, the Nano, will roll out of West Bengal state with a price tag of just 100,000 rupees ‑ £1,350 ‑ and will be exported to richer nations, beginning with Europe, in two years.

Ratan Tata, chairman of Tata Motors, said the car was originally designed to bring motoring to India's masses, but he was taken aback by the considerable interest in the west.

He said: "Initially we did not plan for this product to be marketed anywhere else but India or developing countries … I felt that the niche did not exist in the west. But now the present economic scene makes it somewhat more relevant in price."

The basic model has few frills, not even air-conditioning to deal with intense Indian summers. But Tata executives are convinced that with India's improving road network and a rising middle class the company could sell a million Nanos a year.

The emergence of the Nano has caused concern among green campaigners, who have warned of an environmental nightmare on India's roads. Although there are just 5m cars in use in India ‑ only seven in every 1,000 people own a car ‑ the roads are clogged with dozens of other vehicles.

The company expects to sell 100,000 cars this year before switching production to its new plant in Gujarat, which is capable of producing 250,000 units a year.

Mr Tata said the car would be the greenest in India. The four-door, five-seater Nano has a 624cc engine at the rear, which delivers 23.6km per liter, and has a CO2 emissions rating of 101 g/km (grams of carbon dioxide per kilometer driven).

The Nano is being redesigned for Europe and the United States. Rigorous safety rules in the west mean the car must be fitted with airbags and its rear end strengthened.

Tata said: "We have many of the components ready ... It's just early days, but in Europe we will be ready in 2011. The United States a bit longer."

He added that unlike India, where affordable private transport will become a reality with the Nano, the western market will be different. "I had the Indian family in mind when I designed this car, where four people travel together by motorbike. I thought they could travel more safely by car. I think in the United States [the Nano] would be for younger people who want a low-cost car."