Bajaj Auto has confirmed that it would launch a small car in 2011, to compete with the Tata Nano, with or without its development partner Renault.

The two companies are currently developing the small car which is expected to be priced at $2,500. Bajaj has clarified that the small car will hit Indian roads in 2011, irrespective of any constraints on the part of Renault Bajaj has primary responsibility for the design, development, manufacturing, and supply chain management for the small car project.

Code-named ULC for ultra low cost, the car is priced slightly above the Nano and Bajaj claims it will have a Nano-beating mileage of 30kms per litre. The company plans to poition and market the ULC as the most fuel-efficient car in the country.

Production of the car would be carried out at Bajaj's production facility at Chakan near Pune. Due to the global recession, Renault has recently frozen its investments at its upcoming Chennai plant.