$2,500 car brings transport to India's masses

NEW DELHI (CNN) -- An Indian car manufacturer unveiled its much-anticipated $2,500 "people's car" on Thursday -- a four-wheel passenger vehicle which it hopes will provide a much-needed transportation option for the poor.

Tata Motors is billing the Nano as the world's least expensive four-wheel vehicle, with the first batch to hit the Indian market in the second half of this financial year.

Skeptics have questioned whether the car meets safety and emissions standards.

Others are concerned that the ultra-cheap vehicle could dramatically tax India's already poor infrastructure and contribute to the country's existing urban gridlock.

Chief U.N. climate scientist Rajendra Pachauri, who shared last year's Nobel Peace Prize, said last month that he was "having nightmares" about the prospect of the low-cost car, reported The Associated Press.

"If you're talking about urban environment, it will cause serious problems," Jamie Leather, a transport specialist with the Asian Development Bank, told AP. "It's a major concern."

But company chairman Ratan Tata said the Nano met both Indian and European emission standards and that it had been designed to pass international crash test standards.

It would average about 50 miles per gallon, he told AP.

"Doctor Pachauri need not have nightmares," AP reported Tata as saying on Thursday. "For us it's a milestone, and I hope we can make a contribution to the country."

Tata, which is in talks with Ford over a buyout of Jaguar, expects the car to sell domestically for the first two to three years and says that it is still exploring exporting options. The company is yet to decide whether it will set up additional plants outside India or export the finished product.

The basic model of the car will cost $2,500, plus additional taxes and transportation costs. It will be produced in a manufacturing plant being built in the northeastern Indian state of West Bengal.

The plant will have an initial production capacity of 250,000 vehicles per year, possibly expanding to 350,000. There are no immediate plans for satellite manufacturing plants, limiting the vehicle's initial production.

AP reported that in 2005, Indian vehicles released 219 million tons of carbon dioxide, the leading greenhouse gas blamed for global warming.

By 2035, that number is projected to increase to 1,467 million tons, due largely to the expanding middle-class and the expected rise of low-cost cars, according to the Asian Development Bank.

"The cheaper and cheaper vehicles become, the quicker those pollution levels will increase," Leather told AP. E-mail to a friend

CNN Delhi producer Tess Eastment contributed to this report

Copyright 2008 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.

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