Tata Motors [Get Quote], said that coming out with the Rs 100,000 car is both a social and business responsibility.

"The Rs 100,000 small car would bring down the carbon dioxide emission," Tata Motors MD Ravi Kanth told reporters.

Kanth said that the launch of the car couldn't be deferred or stopped due to a lack of infrastructure.

"Infrastructure woes are being taken care of by the government. Both infrastructure development and launch of the small car have to be done together," he said.

On why the company wanted to launch the small car, he said, "because people want to have a small car".

Tata Motors, which is bidding for Land Rover and Jaguar, is bullish about the UK auto market. The capability of auto brands in UK are high, Tata Sons Chairman Ratan Tata said at the conference.

The Indian auto industry is plagued with high interest rates and invariably high input cost, with an appreciating rupee adding to the woes.

"Higher interest rates are affecting consumption. Strengthening of the rupee is affecting exports. We cannot withdraw our capital expenditure because they are committed.

The industry is affected because of the huge input costs in the last few years," Ravi Kanth added.

Apart from these drawbacks, rise in metal prices have had a debilitating effect on the sector.

"It is an extremely challenging situation for the auto industry," he said.

"The industry can tackle these problems internally by launching new products and marketing aggressively," he said.

To a query on price cuts or discounts for the festival season, Ravi Kanth declined to comment.