Students of mechanical engineering at the Lords Institute of Engineering and Technology have designed and fabricated an aircraft that can be used for commuting within the city, in what is called an effort to solve traffic problems in the city!

Made with a budget of about Rs 1 lakh, the single-seater can take off with a short run up of about 100 meters at a cruising speed of 50 to 60 kmph and fly at an altitude of 1000 ft. The aircraft has a fuel efficiency of around 25 km/litres and can fly at a moderate speed of above 100 kmph. Research is on to further modify the aircraft and make it commercially viable for production. The aircraft has been developed under the guidance of Dr. Mohd Masood and has been solely developed in the college campus. The project is part of a series of projects planned to solve the day to day problems of citizens of the country.

Too bad I did not get to see it take off and fly as claimed.....

Is this anything new ? Apart from 1 Lakh budget. Such aircraft are called 'Microlight' / Últralight' and commercially tested/Reliable/Certified ones used to cost 4-5Lakh some time back:
http://en.wikipedia.org/wiki/Ultralight_aviation

There are few people in Bangalore building similar planes in thier personal capacity. But they are themself qualified Aviation engineers and are well aware of safety and testing norms.

Please beware that Flying is no joke ( must have wathced Leonardo's Aviator). Building aprototype in one thing,  testing is always more difficult, costly and challenging than building itself. I have known friends working on new Air/Train signalling system, which are under test for almost a decade.

All the best for your effort. There are a bunch of forums on  the internet, where you can share your findings and pick up tips, tricks and DO'and Don't.

http://www.microlightforum.com/content.php
http://microlighters.co.za/index.php?sid=6e6bad0603bf83b66b824a3e6819a24e
http://eaaforums.org/forumdisplay.php?9-The-Ultralight-Strip

One used for Sale
http://www.ebay.co.uk/itm/Single-seater-weight-shift-control-microlight-factory-built-Safe-easy-flying-/251162905579?pt=UK_Bikes_GL&hash=item3a7a79cbeb

What about DGCA Licensing cost ?
Is it not required or it will be free with the plane ?
Previous thread of micro-lite ended with Licensing cost. Before 1.5 decade, Bengal was cheapest training cost where 1lakh can make a pilot with CPL (With Scholarship).

But Now ? No price can give CPL from bengal . (Look Bengal become bengal  ).

+1 to ujjwaana..
apart from that, i personally feel that it cant be a solution to the traffic problems.
things might seem to be working with a few such machines, but think, when there are numerous such microlights..
Traffic on surface(road), is a major concern concern,no doubt. But air trafficking is a more complex agenda to solve.

It would be lots of fun if you remove that wing and drive it as go-kart 

Too ambitious,  eh??? A product's viability is totally different cup of tea from making a single prototype (assembled?) . Don't think that everything and any thing 'chalegaa' in Hyderabad's horrendous traffic.. How many times was it flight tested on the private air field? (forget about the traffic both on ground and air ). Congrats for the effort and enthusiasm.

what a beauty but sad as i did not see it fly.
anyways 1 lac is nothing compared to the costs of the modern day cars in india.

We should not forget the expenses involved in training for ultralights in india, even that will be a factor when we add up the costs

Honestly, what exactly are you (or trying to) saying, or meaning?