Tata Motors will not increase the price of its Rs 1-lakh wonder car, the Nano, a company insider told rediff.com on Wednesday.

A recent report that Tata Motors' [Get Quote] was being pressured to hike the price of Nano had caused concern among the car's prospective buyers.

The report stated that the leading auto-component suppliers had approached the company for a price increase.

According to the report, New Delhi-based Sona Koyo, which is supplying steering systems for the Nano, and Minda Group, which supplies electrical switches, confirmed that they and other component suppliers suggested a price rise to Tata Motors.

However, Tata Motors has decided to stick to the Rs 1-lakh price tag -- plus value-added tax and transport charges -- for the car as the company believes hiking the price at this stage will be a 'breach of promise to the customers.'

Instead, the Tatas have set up a special team to look at ways and means to control the car's manufacturing costs. Soaring steel prices have been a major worry for the company.

Steel accounts for 15 to 20 per cent of the cost of an entry-level car.

In the earlier report, Surinder Kapoor, chairman and managing director of the Sona Group had said, "All component suppliers to the Nano are reassessing the price hike and our message will be conveyed to Tata Motors."

Although work is going on in full swing at the Tata Nano's Singur factory in West Bengal, the bookings for the car will be delayed.

Instead of July, the process will commence in September. In case of a further rise in steel prices till then, the company will look for solutions to cut manufacturing costs further, the company official said.

Last monsoon's fury and the recent panchayat elections are being cited by the Tatas as reasons for the delay.

The company plans to invite Prime Minister Manmohan Singh and West Bengal Chief Minister Buddhadeb Bhattacharjee to the Singur factory in October when the first Nano is expected to roll out.

• The Tata Nano: Complete Coverage