Crowds gather in New Delhi for the launch of the Nano, the Tata Group's 'people's car'. Photograph: Money Sharma/EPA
Tata, the giant Indian company that designed and manufactured the Tata Nano, is marketing the car as a safer mode of transport for families who squeeze on to the back of motorbikes.
It will go on sale in India for 100,000 rupees but it will not be available in the Europe due to more stringent safety and emissions standards.
Speaking at the launch of the car today, the Tata chairman, Ratan Tata, said: "I observed families riding on two-wheelers - the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby.
"It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family. Tata Motors' engineers and designers gave their all for about four years to realise this goal.
"Today, we indeed have a people's car which is affordable and yet built to meet safety requirements and emission norms, to be fuel efficient and low on emissions. We are happy to present the people's car to India and we hope it brings the joy, pride and utility of owning a car to many families who need personal mobility."
Tata, which hopes to buy Land Rover and Jaguar from Ford, also hopes also to create a "new market for cars which does not exist", making them accessible to India's booming middle classes recently made rich by an economy growing at around 9% a year.
This rapidly expanding market is potentially extremely lucrative, with the consultants McKinsey predicting the size of the Indian middle class will grow from 50 million now to 583 million by 2025.
The car has a 600cc engine in the boot, four doors and uses a lot of plastics as well as steel in its body frame. It is being manufactured at a new plant near Kolkata, with an initial capacity of 250,000 cars a year.
Tata believes it can eventually sell up to a million Nanos a year. Even though it is expected to be relatively fuel-efficient, such figures alarm environmentalists already concerned by the congestion and rising pollution levels in India's overcrowded cities.
"There is this mad rush towards lowering the prices to achieve mass affordability,' said Anumita Roychoudhury, of the Centre for Science and Environment in Delhi.
"If vehicle ownership increases very rapidly, we'll have a timebomb ticking away. When you lower the price that drastically, how will you be able to meet the safety and emissions standards? There are no clear answers yet."