The Nano, the world’s cheapest car, may struggle commercially due to surging raw material costs.

The price of 100,000 rupees, (£1,250) is much less viable than it once was - Since Tata started developing the car in 2003, raw material costs have risen from around 13 per cent to 23 per cent before taxes.

Analysts expect the Indian-owned company’s promise to sell a basic model for 100,000 rupees to prove unexpectedly costly, reported The Times.

To lessen losses, rivals have suggested that Tata will limit sales of the basic Nano model and make money back by pushing upgraded models.

It is due to go on sale in the autumn.