In 1971, Prime Minister Indira Gandhi's Cabinet proposed the production of a "People's car": an

efficient indigenous car that middle-class Indians could afford. In June 1971, a company known as
Maruti Motors Limited (now Maruti Suzuki) was incorporated under the Companies Act and Sanjay
Gandhi became its Managing Director.[3] While Sanjay had no previous experience, design proposals
or links with any corporation, he was awarded the contract to build the car and the exclusive
production licence. The criticism that followed this decision was mostly directed at Indira, but the
1971 Bangladesh Liberation War and victory over Pakistan muted the critical voices. The company
did not produce any vehicles during his lifetime. A test model put out as a showpiece to demonstrate
progress was criticised. Public perception turned against Sanjay, and many began to speculate
growing corruption. Sanjay then contacted Volkswagen AG from West Germany for a possible
collaboration, transfer of technology and joint production of the Indian version of the "People's Car",
to emulate Volkswagen's worldwide success with the Beetle. During the Emergency, Sanjay became
active in politics and the Maruti project went on a back burner. There were accusations of nepotism
and corruption. Finally, the Janata Government came to power in 1977 and "Maruti Limited" was
liquidated.[5] A commission was set up by the new government headed by Justice Alak Chandra
Gupta which gave very critical report of the Maruti affair.[6] A year after his death in 1980, and at the
behest of Indira, the Union government salvaged Maruti Limited and started looking for an active
collaborator for a new company. Maruti Udyog Ltd. was incorporated in the same year through the
efforts of Nehru Gandhi family friend and industrial doyen V. Krishnamurthy.[7] The Japanese
company Suzuki was also contacted to present the design and feasibility of their car to be
manufactured in India. When Suzuki learned that the Government of India had contacted
Volkswagen as well, it did everything to pip the German company in the race to produce India's first
People's Car (Maruti 800).[citation needed] It provided the government a feasible Design of their 'Model 796',
which was also successful in Japan and East Asian countries.