Toyota plans to develop a compact passenger car for emerging markets, and plans to start selling in India from around 2010, the Nihon Keizai Shimbun reported on Tuesday.

The one-litre vehicle will be priced at less than $US7,200 -- about $900 cheaper than the lowest-priced Toyota vehicle currently on offer, the business daily said.

Toyota will use group minivehicle expert Daihatsu to help develop the car in Japan.

Parts and materials costs will be kept low by making the car and buying its components mainly in emerging markets.

After India, the vehicle will be released in Central and South America as well as central and eastern Europe, the report said.