The world’s cheapest car is here and India may soon stake claim to manufacturing the world's most fuel efficient small car excluding hybrids. Two wheeler maker Bajaj Auto says work on its small car project is progressing smoothly and the project has even achieved a technology breakthrough as far as the fuel efficiency and emission norms are concerned.

Rajiv Bajaj, Managing Director, Bajaj Auto said, "We are not after the cheapest possible car we are after a little car which will raise the benchmark as far as fuel economy and emission standards are concerned .We can share with you that we have targeted the fuel economy in excess of 30 km/litre and I think we are on our way to achieve that. Big change as far as fuel efficiency on road is concerned and we are equally confident for carbon dioxide (CO2) emissions. We will be way below 100g/km of CO2.”

Bajaj takes on the Tatas

Bajaj's claim of 30 km/litre will be higher than the Nano's claim of 23.6km/litre. Bajaj says the car will be ready for production in 2011 with or with without Renault-Nissan. The ultra low cost (ULC) project was conceived as a three-way alliance where Bajaj would holds 50% equity with Renault and Nissan accounting for 25 % each. So is there trouble between the two partners?

Rajiv Bajaj, MD, Bajaj Auto said, "As far as schedule is concerned, no change in schedule because development which is led by Bajaj continues as it should be as anticipated from beginning, as far as investments are concerned, whether with or without Renault Nissan Bajaj is going to implement this project. So any constraints they may have do not affect this project."

Bajaj goes ultra low cost

CNBC- TV18 learns Bajaj and its alliance partners are currently working out brand and distribution details. The ULC platform will have more than one petrol variant and will be available in more than one engine specification.