Fiat plans to tap into niche and specialist markets in India rather than challenge small car market leaders Maruti Suzuki and Hyundai head on.

It’s the latest move by the Italian carmaker to crack a market which it was one of the first western makers to enter but has become one of the worst performing/

Backed by a 57-strong dealer network, Fiat is looking at fast-growing areas like SUVs and sporty cars and will use its alliance with Chrysler to help establish a foothold.

It will introduce a SUV to India this year and plans build a small version of the car there by 2015 as well as aiming at the sporty end of the market with the Abarth versions of its 500 and Punto models.

Fiat has built its own dealer network after ending a five-year distribution deal with Tata in 2012.

Enrico Atanasio, managing director of Fiat India, told Reuters: "(Our performance) is not what the brand deserves." He believes there is potential for growth even though car sales in India are set to fall this financial year for the first time in a decade, hit by high interest rates and slowing economic growth.

However, LMC Automotive expects India's car market, currently around 2.6m vehicles, to grow to about 6.9m in 2017. Atanasio believes Fiat can end 2013 with 1% of the market and aim for 5% longer term.

He told Reuters that the company plans to finish the year with 112 dealers, down from the 170 it had with Tata, and will continue to build engines and cars locally with the Indian company.

However the Punto and Linea models have not caught on in India and Fiat chief executive Sergio Marchionne has admitted that the company had not got the product offering right.

Fixing it means introducing the Jeep Cherokee and Wrangler models this year, to grab a piece of India's burgeoning SUV market, which LMC Automotive sees reaching more than 1m by 2019 from just 363,000 last year.

Fiat also plans to begin production in India of a new mini-SUV Jeep from 2015. This will be sold locally and also exported to other markets, Atanasio said.

He added that in all, Fiat-Chrysler plans to launch nine new or refreshed models in India in the coming years.