Refuting allegations that its Rs 1-lakh car will add to air pollution, Tata Motors Chairman Ratan Tata on Thursday said the eagerly awaited Nano will be 12 per cent lesser polluting compared to emissions from two-wheelers.

Speaking at the AGM of Tata Motors, he also countered the arguments that Nano would cause congestion on roads, and said, "Even if we produce one million per annum over the next five years, we would not be more than 4-5 per cent of the vehicles on the roads. No one can argue that we would be a major congestor."

Last year, India sold 1.2-million cars, 7.3-million two-wheelers and has 14.5-million cars and 80-million two-wheelers in running condition.

Nano will be a four-seater car with a mileage of 23 kilometers per litre. The demand is expected to exceed the supply, he said.

The company's plant for the Nano in Singur, West Bengal, is expected to go into operation in the last quarter of this calender year, despite a slowdown in work and flooding at the site, Tata said.

New variants of the Nano are also currently under development to meet new environmental and fuel price challenges, as also the market requirement of several international markets, Tata said.

The company will launch the petrol version and later on diesel version of Nano, he said.