The noise is of the clutch release bearing. A very typical noise. I experienced the same on the Palio D and the noise kept increasing till the day the bearing finally exploded inside. Yes it exploded. It was removed in pieces. That said, plenty of cars seem to go on forever with a certain amount of clutch release bearing noise. A bit of it can even be termed okay and inevitable. Case in point being our Palio D again. It's run 1,20,000 km's and is on it's third clutch kit ; but a little bit of noise has always been there. Change the complete clutch kit in one go, whenever you plan to do it. No point opening up things ( and paying for labour) again and again. Cheers.