Tata Motors is reportedly working on a premium small car likely to be built on the refurbished Indica platform. The company will launch the hatchback, dubbed "X0", in 2015 to compete with Ford and Maruti Suzuki models.

Tata Motors' managing director Karl Slym intends to deliver a contemporary vehicle that appeals to the youth.

The automaker can use the existing Indica platform to ensure quick and inexpensive development of the new product, according to a person close to the development. The source told the Economic Times, "A common man does not see the platform; he or she is attracted by the style, design and features. The new X0 intends to deliver just that with almost 75% change in body in white [body panels]."

Tata Motors is expected to finalise the exact product specification in terms of design, cost and time on 31 March, after which vendors will be asked to work on the project.

The small car is likely to run on a 1.05-litre three-cylinder diesel engine and 1.2-litre turbo petrol engine, but the company may also include other higher capacity engine options to offer a wider price range. The hatchback will face competition from cars including Hyundai's new small car (BA) and the localised Skoda Fabia.

Another source said Tata Motors was likely to invest INR40bn (US$750.71m) to INR50bn on new product development in the passenger vehicle business over the coming three to five years.

Five people claimed a compact sedan and compact SUV were also being discussed seriously. One of them added, "These products too should hit the market in the next few years, but the exact specification in terms of which platform the sedan and SUV will come on is still being discussed as Tata Motors has multiple compact car platforms (X0 and X1) on which it could build these products."