Black Country-based engineering group Caparo is to build the body structures for the world's cheapest car, Tata's new Nano.
Selected inner structural panels will be pressed and assembled by Caparo at a new facility in Singur, adjacent to the Tata Nano manufacturing plant.
Caparo will supply 60 per cent of the assemblies, with the rest being manufactured in-house by Tata.
To meet Tata's ambitious cost targets, Caparo has installed a new semi-automated production line with zero fault forward quality control systems.
Caparo chief executive Angad Paul said: "The body technology is relatively conventional, but the manufacturing technology is the result of very sophisticated analysis to ensure high-quality, low cost production.
"We completed this extremely quickly to meet our customer's deadline, with start of production just six months after the contract was confirmed."
Tata chose Caparo for the contract because of the firm's success with a similar contract to supply the Suzuki Maruti 800 and for its high quality standards.
Caparo India country head Sunil Pahilajani said: "Quality at this level is a tremendous complement to our people."
Caparo also supplies Indian plants for Ashok Leyland, Eicher Motors, JCB, John Deere and Hero Honda, as well as most manufacturers of two and three wheeled vehicles. The Tata Nano, launched last month at the Auto Expo 08 event in Delhi, will cost around £1,250 when it goes on sale.