BS reported that pressure is growing on TATA Motors' ability to hold the price tag of INR 100,000 for the Nano with leading auto component suppliers saying that they have approached the company for a price increase. With steel prices soaring, TATA Motors recently set up a special team to look at ways and means to control the car's manufacturing costs.

Costs have risen substantially since December 2007 and the recent cut in steel product prices has brought little relief. Most component manufacturers believe that since the car is yet to go into production, they are optimistic that TATA Motors will reconsider component prices.

Delhi based Sona Koyo, which is supplying steering systems for the Nano and Minda Group, which supplies electrical switches have confirmed that they and other component suppliers have suggested a price rise to TATA Motors. Mr Surinder Kapoor CMD of Sona Group said that "All component suppliers to the Nano are reassessing the price hike and our message will be conveyed to TATA Motors. We have not heard anything from TATA Motors yet. "

Mr NK Minda chairman of Minda Group said that "We are holding discussions with TATA Motors. They have not agreed to our hike in prices but we are optimistic that prices should be revisited once production of the car starts. The hike so far has been unbearable."

The report cited a TATA Motors spokesperson as saying that "Like any other company, the terms between TATA Motors and its suppliers are confidential."

Steel accounts for 15% to 20% of the cost of an entry level car and about 500 kilogram of steel is used. Government intervention saw prices of hot and cold rolled coils, which are used to make the outer body of the car, being lowered last week by INR 500 to INR 750 a tonne. Prices of alloy steel, which accounts for over 60% of the total steel used in a car, have not been cut.