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Ratan Tata, chairman of Tata Motors, hopes to give India its first 'people's car' (Associated Press)

India's Tata Motors has announced plans to build a five-seater family car that will cost about $2,400 new –less than half the pricecharged by itscompetitorsfor their cheapest offerings in India.

"We have decided to locate this rather revolutionary plant, which we hope will give India its true 'people's car,' in West Bengal," Tata Motors chairman Ratan Tata said atapress conference on Thursday.

Tata hopes to price the car so that millions of Indians who nowcan't afford anything more than ascooter or motorcycle will be able to become vehicle owners.

The cheapestnew cars in India are now no-frills compact models made byMaruti Udyog, which is majority owned by Japan's Suzuki Motor Corp. Maruti's cheapest models now cost upwards of $5,000.

How can Tata make a $2,400 car?Tata said he's planning to use less steel and more plastic. Strong adhesives would also take the place of welding, he said.

That has raised safety questions in the eyes of Tata's competitors.Suzuki's chief executive said Tata's $2,400 car plan wasn't "feasible" in light of tighterstandards coming into effect in India.

Prototypes of the car are already being tested at another company facility, Tata said. The first carswill come off the assembly line in 2008.

The new plant will cost $250 million and will create 12,000 jobs in West Bengal – a state that hasn't attracted much investment recently because it'sgoverned by a communist-led coalition.The Tata facility will be the first auto plant in West Bengal.