NEW DELHI: India's Tata Motors Limited unveiled the world's cheapest car yesterday, bringing car ownership closer for millions of poorer consumers in emerging markets but raising environmental concerns.

The four-seater Nano, with an engine around 625cc, will have a dealer price of 100,000 rupees ($2,500), about half the cost of the cheapest car on today's market, a 25-year old model from Maruti Suzuki, Tata's great rival.

The Nano will go on sale later this year, the company said.

"Let me assure you and our critics the car we have designed will meet all safety norms and all foreign environmental criteria," chairman Ratan Tata said as he unveiled what had been dubbed the "People's Car" at the Auto Expo in New Delhi.

"In a way it is a high point for me. There is a sense of achievement and vindication," he said later.

The compact but curvy Nano stands in sharp contrast to the luxury Jaguar and Land Rover brands that Tata is negotiating to acquire from Ford Motor Company.

Hundreds of people crowded into the pavilion to see the long-awaited launch, standing on chairs to get the best view as Tata introduced and then drove the car onto the stage in a media circus more worthy of a pop concert or an Oscar ceremony.

Tata planned the car years ago as a safer and more affordable alternative for the millions who often ferry families of four, plus baggage, on motorbikes and scooters.

"It's a dream come true," Delhi police constable Ashok Singh said at the show. "I look forward to buying that car. My wife will be really happy."

New cars are preferable to buyers in India, where the absence of an organised market for second-hand cars makes buying them a tedious and sometimes risky process.

Environmentalists are not so enthusiastic. They worry millions of the cheap cars will flood on to India's roads, many of which are already heavily congested, sending emissions levels sky high in Asia's third-biggest economy.

The car arrives at a time when oil has topped $100 a barrel, the move to fuel-efficient "green" cars is gaining momentum, and a wave of nostalgia has spurred sales of brands such as BMW's Mini and the Fiat 500 Cinquecento.

The car has a rear-mounted petrol engine and travels 20km per litre, with a basic model and two deluxe variants and plans for diesel versions.

"The proof of the pudding will be in driving it, but visually it looks pretty good," said London-based analyst Ashvin Chotai. "The pricing was a bit of a surprise. I thought it would be a bit higher." Tata said costs were kept low by cutting the "size of the package", which brought about a reduction in material.