The Tata group, maker of the $2,500 Nano car, said that the 20-square-metre (215-square-foot) home comes from a pre-fabricated kit that includes doors, windows and a roof.
"We have already prepared two-three different designs based on discussions with users and are gathering more feedback," Sumitesh Das, the head of the project at Tata.
The basic model of a so-called "Nano" house will cost 32,000 rupees ($720) and will use coconut fibre or jute for wall cladding and interiors. It has a life expectancy of 20 years.
The house, which is being tested in the state of West Bengal, will also be available in a larger 30-square-metre version and with additional features such as a solar panel for the roof and a verandah.
Tata hopes to sell the house to private buyers who have a plot of land available and also to state governments planning mass residential schemes for India's millions of destitute and homeless.
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