Indians may soon be able to buy the ultimate in credit-crunch computing – a laptop that costs only 500 rupees (£7).

The government-developed laptop is the latest in ultra-cheap engineering to emerge from the sub-continent. It is also the most ambitious attempt yet to bring the internet to the developing world and bridge the “digital divide” between rich and poor.

India has already given the world the 100,000-rupee (£1,450) Tata Nano car and a no-frills mobile telephone that costs less than 800 rupees.

The laptop that may be sold for less than the cost of a paperback book has been more than three years in the making.

It forms part of the National Mission on Education through Information and Communication Technology, India’s new scheme to boost learning in rural areas through the internet.

Government officials said that a prototype of the rudimentary computer was expected within months. K. K. Pant, a government spokesman, said: “This basic computing and internet access device will be an extremely powerful learning tool in the hands of the country’s youth.”

The machine is the country’s answer to the American One Laptop per Child project, which set out to produce a computer for $100 (£68). That high-profile venture led by the scientist Nicholas Negroponte ran into problems after several companies, including the chip manufacturer Intel, refused to cooperate. As a result, the cost of Mr Negroponte’s laptop will be closer to $200.

Technology experts, mindful of Mr Negroponte’s experiences, have suggested that India’s plans for an even cheaper machine are unrealistic. The respected website arstechnica.com said: “Can India do it? The inner-philanthropist hopes so but the realist who buys technology says ‘No way’. ”

The technology website said that the price of computer components was too high to make a 500-rupee laptop. Analysts at the financial management company Merrill Lynch estimated that the Negroponte laptop screen alone cost about £20. “India’s $10 price hopes appear to be nothing more than pure fantasy,” it concluded.

A government official confirmed that plans for the laptop would be outlined today but refused to give further details. Officials had put the cost of the machine previously at about 1,000 rupees but believed that the price would come down if it was mass produced. Some critics have branded the scheme a publicity stunt timed to coincide with the forthcoming general elections. Plans to cut the price to the bone appear to hinge on domestic technology that uses low levels of power.

The laptop is the result of cooperation between several of India’s elite technology institutions, including the Vellore Institute of Technology, the Indian Institute of Science in Bangalore and the Semi-conductor Laboratory that forms part of India’s Space Department. Private companies are also taking part.

Down memory lane

1953 IBM’s drum memory 650, the world’s first mass-produced computer, sold for $200,000 to $400,000 (then £1,400)

1959 An integrated circuit, an essential piece of technology in computers, cost $1,000 (then £355). It now costs less than $10

1962 The IBM 7094, a data-processing system built for solving complicated scientific calculations, sold for an average price of $3,134,500 (then £1.2m). It was removed from IBM’s marketing campaign in 1969

1977 Apple sold its Apple II for $1,195 (then £680). It had only 16 kilobytes of random-access memory and the price did not include the monitor

1981 The first IBM PC cost $1,565 (then £775) and had the memory for a few text files. Source: Times archives

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