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UM(United Motors) is a result of a merger between Phantom Motor Corp and India Motors. Now with the merger over Phantom Motor Corp and India Motors are sub division's of United Motors. India Motors is finally ready to release it's first new car design since the merger. India Motors new Model is designed for the India market.

India Motors new engine design to go in their new model lineup, Low power, low price Low man hours and economy.

If your going 0.4L you realistically need to turbo it. I have one turboed around 70hp. I would be quite concerned as to weather 26hp is enough power to even move this small car.

0.4L is definitely too small. Actually i had best fuel economy with an 1.0L I4T, i get sub-250g/kWh and maintain around 70hp, which might actually work for a car of this size.

Would it be slower than some of the early VW Bug's that only had 30HP.

Well, Fiat 126 had 24 hp, but it was smaller, older, lighter. For this car, I'd go for 40-50 hp, if price is the only concern.

you definitely need a 600-700cc engine. Look at your specs, you have to rev it up to 8000RPM to get 26hp. The high revs means it's not going to be very reliable, and yet it still doesn't really move. Also, try injections, presumably multipoint-injection cause direct injection would be too expensive. Also, 10.24% fuel economy is bad, even for a cheap car. Maybe run the engine less rich and run a lower cam profile.

Everybody is going on about how small the engine is...
You are using carbs on a 2013 engine... yes yes, you save a couple of man hours, but for running costs, economy, reliablity and a bit more power, you are better off with the single point injection. Another thing (something The Tom pointed out) is your Max RPM. I am quite certain nobody would rev a little Indian city car all the way up to 8000rpm. They'll be shifting up at 4000rpm never mind double that figure. This means you can get away with lower cam profile benefiting economy greatly.

Oh and finally, increase your engine size

I built something quickly which i think might fit much better. I'm not saying you have to use this, you can change whatever you want about it, but it's supposed to help you a bit

Designed a new engine. Better performance and economy but more expensive.