Bajaj Auto, Indian auto major, has entered a deal with Renault-Nissan Alliance to produce and market an ultra low-cost car.

According to the agreement, Bajaj will only design and manufacture the new car, while the Renault-Nissan will shoulder the responsibility of marketing the vehicle in India and abroad.

The would-be low cost car, which will be branded under the French partner’s name, is expected to hit the roads in 2012.

Speaking on the topic, Renault-Nissan’s chief executive Carlos Ghosn said, “We’ve been working for a long time on infra low cost car that should come to India but could also be exported from India.”

General Motors is preparing to launch a small car in Indian in 2010, while Toyota has plans to manufacture a small car in 2011.

Tata Motors has already launched a low cost car named Nano. Nano costs about 115,000 rupees (equivalent to $2,480).