The Bajaj group has announced that it would launch a small, fuel-efficient car which just might end up giving competition to Tata's newly launched Nano. Rajiv Bajaj said he found the Nano "cute". Drawing a parallel to the two-wheeler industry, he said that the Nano would be a "scooterette" of that industry and added that issues such as emissions and congestion would arise because of the lack of adequate infrastructure.

Car market leader Maruti Suzuki India Ltd, however, confessed that the car could have "some impact" on its sales. The company has the closest competitor to Nano in Maruti 800 which costs twice as much as the Tata car.

The US-based car maker also said it would not reduce the prices of its small car Spark to match Tata's price.

French company Renault, which has something similar to Tata Nano in the pipeline, said the car was cute to look at but expressed apprehensions on Tata's ability to stick to the Rs one lakh price tag.

"Tata's car is cute and he (Ratan Tata) is doing a great job. I would like to see in the coming months the retail price," Renault India Managing Director Sylvain Bilaine said.