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India tycoon still has big hopes for little Nano

Tata Motors' Nano may have been a consistent flop in India, but the former chairman of parent and conglomerate Tata Group still has high hopes for the world's cheapest car.

In an interview on CNBC's Managing Asia, Ratan Tata said he believes the minicar still has the potential to take off in the home market.

"A re-launched Nano with some of the differences that we're trying to incorporate, yes I do," said Tata, adding that the company has plans to launch the Nano outside of the Indian market, but did not give a timeframe for when.

(Read more: Softness in Indian market a concern: Ford Motor)

"Maybe it gets launched in another country like Indonesia, where it doesn't have the stigma and the new image comes back to India. Or maybe as a changed product that gets marketed in Europe. There's a lot of interest in Nano outside India," said Tata, who stepped down as chairman of multinational conglomerate Tata Group in 2012.

Indranil Mukherjee | AFP | Getty Images

The Nano, positioned as the "people's car" starting at around $2,500 for a stripped-down model, has struggled to gain traction since its launch in 2009. Sales of the vehicle plunged 74 percent on-year during the April-September period to 10,202 units.

In October, Tata Motors introduced a new model of the car, the Nano CNG emax – an eco-friendly variant of the original Nano that can run on either gasoline or compressed natural gas –in a bid to revive sales.

(Read more: Nissan to unveil Datsun in India in cheap-car push)

The automaker is also slated to launch a diesel-powered version of the vehicle by the end of March 2014. The fuel is cheaper than gasoline thanks to government subsidies.

Tata says the marketing around the Nano as the world's cheapest car is partly to blame for its failure to gain popularity.

Instead, it should have been promoted as a safer alternative for the millions of families who tend to crowd more than two members onto two-wheelers.

(Read more: Keep calm and carry on in India's slumping car market)

"I always felt the Nano should have been marketed towards the owner of a two-wheeler because it was conceived to give people who rode on two-wheeler an all-weather, safe form of transportation, not (the) cheapest," Tata said.

"It became termed as the cheapest car by the public, and [also] I'm sorry to say, by the company when it was being marketed," he added.

To watch the full interview with Ratan Tata, tune into Managing Asia on 29 November at 18:30 SIN/HK.

—By CNBC's Ansuya Harjani; Follow her on Twitter:@Ansuya_H

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