The Economic Times of India reports that Tata Motors will be receiving assistance from its partner Fiat on engine technology for its Rs 1-lakh car.

The prototype for the small car is believed to have been made at Tata Motors' Pune plant, and Fiat has worked with the former's core team on the engine technology, according to sources.

The newspaper said that before Fiat came into the picture, Tata Motors had tested a 550-565cc rear engine on the Rs 1-lakh car, which they discovered was not powerful enough for the four-seater. The company then began work on a 750-800 cc engine. The Fiat tie-up happened around the same time, and Tata felt that the Italian giant's expertise and strengths will help smoothen the process.

"Fiat's involvement in the Rs 1-lakh project and other future Tata Motors launches is inevitable, given the Italian company's established position in state-of-the-art car technology. But the presence of the foreign partner is likely to push up project cost in form of royalties and technology fees," warned an industry expert, according to the newspaper.

The Rs 1-lakh car is likely to be rolled out some time in late 2007 or early 2008 from its production facility in West Bengal. The company hopes to achieve sales of 500,000 in the first year and about a million vehicles by the third year.

There have been talks about Fiat's likely involvement in Ratan Tata's dream project since July, when Tata Motors and the Italian partner formally announced their intentions of setting up an industrial joint venture. But at that time, both companies said their relationship would be restricted to the scope of the MoU.

Fiat CEO Sergio Marchionne, at a press event in Venice in September  also said the company is considering developing a low-cost car with its Indian partner Tata Motors.

See also: INDIA: Fiat may team up with Tata for low-cost car

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