A brand new Tata Nano car which was on its way to be delivered in Vadodara, caught fire near Boriyavi village in Anand district, police said.
The Nano will get some upgrades on this year's model year.
The update to the Tata Nano makes it a more appealing package.
Meanwhile, Tata Motors has described it as a "one-off incident" and clarified that there was no manufacturing or design lacunae in the Nano.
In November Tata Motors launched a brand new variant of Tata Nano.
"The rear engine does not have a proper cooling system as a result of which the engine heats up leading to such an incident. The summer season will be the toughest test for the Tata Nano," says Mahendra Dhruva, national president, The Institute of Insurance Surveyors and Adjusters (IISA).