Tata Motors will raise the prices of Nano by up to 4 percent. Now customers who had retained their bookings despite not having been alloted the Rs one-lakh car in the first batch, will have to pay some extra money for owning their dream car owing to a steep increase in input costs.

According to the sources, increasing input costs, especially that of steel and other commodities like rubber, had put pressure on margins, forcing the company to increase the price.

Tata Motors had said that the first lot of customers are price-protected and they will pay the original price that was announced at the car’s launch back in March. The company said it will raise the prices of its small car Nano by up to four per cent after it completes the delivery to first one lakh customers.

"Despite a steep increase in input prices, their Tata Nanos are being priced only 3-4 percent higher, depending on the model, than the price announced at launch," said the company.

And after the long waiting period, the customers will get a compensation from the Indian company. They can choose between a free one year scheduled maintenance contract or an accessory package.

The company said with its 2,50,000 units per year Sanand plant becoming operational ahead of schedule, the company will ramp up production of Tata Nano.

"This is the final step, before the company opens up sales of the Tata Nano," it added.

Nano is a four-passenger car by Tata Motors and it is the cheapest car in the world today. Tata initially targeted the Nano as "the least expensive production car in the world," aiming for a starting price of 1,00,000 rupees, but now it is increasing its prices day by day.