Auto Major Fiat and Tata motors are jointly working on the proposed low-cost automobile priced at around 1 Lakh intended for the growing Indian automobile market.

Confirming the news, Fiat's chief executive officer Sergio Marchionne was quoted by daily La Repubblica as saying the Italian carmaker would provide Tata with "technological know-how and perhaps money".

Auto watchers meanwhile say that while the cash is always welcome, the technology from Fiat could come at a price, which would push up the overall project cost and derail Chairman Ratan Tata’s objective of launching the car at around the price point of Rs 1 lakh.

In another decision likely shortly is on Fiat and Tata jointly exploring industrial and commercial cooperation in Latin America. Fiat’s facilities in these markets could be used by Tata Motors to manufacture utility vehicles and pickups.

Fiat is an industrial enterprise focused on the automotive sector, serving customers in more than 190 countries around the world with an annual turnover of about 47 billion euro, while Tata Motors, the flagship company of the Tata Group, is India's largest automobile company and has over three million Tata vehicles plying in India.