The Tata group may have set a trend in automobile history with the Nano, the world's cheapest car.

Now, a Rajkot-based diesel engine maker is working on a small electric car with foreign collaboration that is likely to be priced at Rs 99,000.

The manufacturer, Fieldmarshal Group, is planning to enter the small car market in partnership with an Australian technology- and project-development firm.

The car, which appears to be a classic commuter vehicle, could have a maximum speed of 70 to 80 km and is being designed to have lightweight batteries and low manufacturing costs.

Under the terms of the joint venture, which is to be signed soon, the Australian company will take the lead role in bringing international foreign investors for the project.

The foreign collaborator has already developed a concept car specifically for the Indian market that could be manufactured at Fieldmarshal's plant at Rajkot.

It is learnt that the Australian company is looking at an arrangement by which Rajkot would house the primary plant and assembly plants could be set up in other parts of the country.

The joint venture is also planning a 24-seater electric bus. Early discussions have revolved around setting up separate companies for the car and bus projects.

The initial focus will be on domestic markets but exports are also on the cards considering the booming market for electric vehicles.

Once it is on the roads, Fieldmarshal's electric car would be another offering after the Reva, which became the highest selling on-road electric vehicle globally last year on the back of tax exemptions and subsidies given to electric car-owners by governments.

In the UK, owners of electric vehicles are exempt from paying parking fees, congestion taxes, sales and road tax. The French government has also introduced free parking for electric vehicles, low road tax and 100 per cent depreciation for companies. No taxes are imposed on electricity used for charging the cars.

At present, the Fieldmarshal group, which is known for its flagship company PM Diesels, manufactures diesel, petrol and LPG auto-rickshaws at its new facility at Shapar near Rajkot.

It has a capacity of 1,000 rickshaws per month and rolls out 450 vehicles per month. It has exported 1,500 vehicles in the last six months, selling petrol rickshaws to Egypt, Sudan and Nigeria and diesel vehicles to Kenya, Tanzania and Ethiopia.

The company expects exports to account for 40 per cent of revenues in the next two years.