Tata Motors, maker of the Nano, the world’s cheapest car, ruled out a recall of the tiny runabout yesterday in spite of three incidents in which fires started spontaneously in the steering column.

Tata, which sells the basic version of the Nano in India for 100,000 rupees (£1,300) plus taxes, said that a short circuit in the combination switch that controls the headlights, windscreen wipers and indicators was probably responsible for the incidents.

Sunil Kumar Panwanda, whose Nano caught fire in Delhi, said that his daughter parked the car outside his home on Tuesday afternoon. Three hours later it was “in flames and smoking”, he told The Times. “I had bought the car for my children and they are now terrified of driving it,” he said in an interview with a local news channel. “I want the company to refund my money and take back the vehicle.”

Ravindra Bhagat, another Nano owner, whose car caught on fire in the city of Ahmedabad, said: “I bought the car because Ratan Tata [the head of Tata] drove and introduced it. I thought this small car will be convenient for daily use in the city. Now, I feel it is better to drive a big car. Even if I get a replacement, I will not accept it.”

Another fire was reported in the city of Lucknow. There were no reports of injuries in any of the incidents.

Tata denied that the cars had caught fire. The company said that there had been “minor smoking ... and a localised melting of some of the fire-retardant plastic parts”.

A spokesman for Tata Motors, which owns Jaguar and Land Rover in Britain, said that the company was considering carrying out “pre-emptive audit checks” on new Nanos to stamp out the fault. It may also ask the owners of the 7,500 cars it has delivered to bring them in to be inspected.

It denied, however, that the car, which it eventually plans to bring to Britain, would have to be redesigned and said that a recall was not planned. The spokesman said: “We do not believe this is a generic fault.”

Analysts believe that the problem is probably due to a batch of faulty parts supplied to Tata.

The malfunction is the latest in a series of glitches to have beset a model that was heralded as ushering in a new era of super-thrifty engineering and lauded as an emblem of India’s status as an emerging economic power when first unveiled in Delhi last January.

In March this year the “people’s car” was launched commercially amid great fanfare in Mumbai. However, Tata faced a big hurdle in its mission to bring four-wheel motoring within the reach of India’s motorcycle-riding middle classes: a relatively small production output of only 50,000 units in its first year.

The paucity of supply was the result of a dispute over the land on which Tata was building a factory to produce the Nano — a row that became emblematic of the social tensions that India faces as it strives to emulate the manufacturing might of China. Tata eventually abandoned the site, at a cost of as much as $350 million.

Such has been the level of hype surrounding the Nano, however, that industry watchers believe its problems are unlikely to put off buyers.

Darius Lam, of Autocar Professional, the Mumbai trade magazine, said that the relatively small number of cars on the road would help the company to contain the problem.

He said that Indian consumers were accustomed to new products requiring “re-engineering” before they worked perfectly. “The excitement that surrounds the Nano means any malfunction will make headlines, but I don’t think any long-term stigma will stick.”

Shares in Tata Motors closed down almost 4 per cent in Mumbai.

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