You aren't considering all the components thus the difference seems very high. I am sure if you consider all the components then you will find the cost difference very reasonable. Just an example - the spark-plugs used in 1.4 Fire are at Rs 125/plug while the ones used in T-jet (iridium) are ~Rs. 1100/plug. The price of brake-pads in 1.4 Fire are ~1/3rd of T-jet's brake-pads. 1.4 doesn't have rear discs. Then there's turbo, inter-cooler, and many other components that are there apart from the engine. The biggest difference is the brand Abarth. Keeping Abarth within 100K of regular Puntos will certainly dilute its value. Fiat's target segment should not be the one looking to buy a regular 8-10 lacs car. It should be the one that wants an enjoyable, safe, performance machine and has a budget of 12-15 lacs. The only option for that person is Octavia TSi or Polo GT TSi + serious mods. A Punto Abarth with minimal mods will be far superior to a Polo Tsi with serious mods.