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MUMBAI (AFP) – India's Tata Motors on Monday launched the world's cheapest car, the Nano, hoping to revolutionise travel for millions and buck a slump in auto sales caused by the global economic crisis.

Company boss Ratan Tata said the no-frills vehicle, slated to cost just 100,000 rupees (2,000 dollars) for the basic model, will get India's middle-class urban population off motorcycles and into safer, affordable cars.

"I think we are at the gates of offering a new form of transport to the people of India and later, I hope, other markets elsewhere in the world," he said, describing the launch as a "milestone."

"The present economic situation makes it somewhat... more attractive to the buying public," he told reporters in Mumbai ahead of a glitzy official unveiling ceremony at 7:30 pm (1400 GMT).

Potential owners of the car -- which is just over three metres (10 feet) long and has a top speed of 105 kilometres (65 miles) per hour -- can apply between April 9 and 25, Tata managing director Ravi Kant said.

A ballot will then select 100,000 people to be the first to get the keys to the vehicle and deliveries will start in early July 2009, he added.

Even affluent Indians are eyeing up the Nano, which has a two-cylinder engine and four-speed manual transmission but no air conditioning, electric windows or power steering, although deluxe versions will be available.

"This is a value-for-money car," said Hasmukh Kakadia, 39, a Mumbai investment analyst.

Shares in Tata Motors on India's 30-share Sensex index jumped eight percent in early trade but finally closed 2.8 percent up on profit-taking.

Car dealers say they have been flooded with queries about the Nano, whose debut was delayed after violent protests over the acquisition of farmland to build the plant, forcing Tata Motors to shift from West Bengal state.

But the new plant in Gujarat in western India will not be ready until late this year or early 2010, Tata said, meaning production must come from existing factories, reducing output and increasing waiting times for deliveries.

Kant said 250,000 to 500,000 cars could be produced from the Gujarat plant from next year but admitted some customers may have to wait more than 12 months in the meantime to take possession of their Nano.

Tata, though, said pushing ahead with Monday's launch of the 20-billion-rupee project was the right decision.

The Nano's arrival comes at a tough time for India's top vehicle maker, hit by the economic slowdown at home and abroad as it tries to absorb the British luxury marques Jaguar and Land Rover that it bought last year for 2.3 billion dollars.

Tata is hoping the Nano will also be a hit overseas in the long term.

Earlier this month, the firm unveiled a European Nano sporting airbags and leather trim that will hit the market by 2011 but be costlier than in India due to the extra features.

A US version is also on the drawing board but requires redesigning to meet American safety standards.

Environmentalists, however, fear the Nano will accelerate congestion on India's already crowded, pot-holed roads and add to choking pollution.

"Every car that goes on the road is going to use road space. We're only adding to congestion," said Rajendra Pachauri, head of the UN's climate panel, which won the 2007 Nobel Prize.

Tata countered by saying that the Nano would be the least polluting car in India.