Renault and its Japanese partner Nissan are set to join in 2012 the crowd of manufacturers producing low-cost cars for India in a bid to challenge head-on the Tata Nano, the world's cheapest automobile.

"I don't want Renault and Nissan to be makers of very pretty cars people dream about but can't afford," Carlos Ghosn, who runs the Franco-Japanese car-making alliance Renault Nissan, said in New Delhi last week.

"We need an entry price that's very competitive," Ghosn said, declaring plans were on track with the alliance's Indian partner Bajaj to roll out the car ?dubbed ULC for ultra low cost ?albeit a year behind schedule.

India's Tata Motors set a new floor globally for car prices when it launched the snub-nosed Nano, whose price starts at around 115,000 rupees (US$2,480). The four-door hatchback mini-car hit Indian roads earlier this year.

Ghosn, who has made the cheap car a pet project, kept mum about the showroom price when he spoke on the sidelines of an economic conference. But he said the cost of the car will be "amazing" and "lower than any car today made in India" when taking into account fuel and other running expenses.

Renault-Nissan had earlier pegged the price in the US$2,500-US$3,000 range.

The car will be designed and made by top Indian motorbike and rickshaw maker Bajaj Auto and marketed by the Renault Nissan Alliance, which currently accounts for just one percent of sales in India.

"We've a clear definition of who does what," Ghosn said, announcing differences with Bajaj that held up the project had been resolved.

Up to 80 percent of the internal car components are expected to be shared with Bajaj's two and three-wheelers, making manufacturing less costly.

"Bajaj is an eminently good choice to make this car as it will be something between a motorcycle and conventional car," said Indian motoring columnist Murad Ali Baig.