The company's wholly-owned subsidiary Honda Motorcycle & Scooter India's (HMSI) 110cc scooter Dio was its cheapest two-wheeler so far in the country at Rs 44,718.
"The Dream Neo is Honda's next big leap towards creating deep inroads into the Indian commuter segment," HMSI president and CEO Keita Muramatsu said.
On the back of its new products and network expansion, HMSI aims to grow over 150 per cent in 100-110 cc motorcycle segment, he added.
"Overall, we are confident of customer demand for Honda two-wheelers and eye 43 per cent growth with 39.3 lakh unit sales in FY14," Mr. Muramatsu said.
HMSI is expanding its sales outlets to about 2,500 by end of this fiscal from 1,950 outlets in FY13.
Developed specifically for the Indian customers, the new entry-level Dream series motorcycle is powered by a 110 cc engine and the company claims that it will give a mileage of 74 kilometre per litre of petrol.
Honda's erstwhile two-wheeler joint venture partner and the market leader Hero currently sells its cheapest motorcycle, the HF Dawn, at a starting price of Rs 36,600 (ex-showroom, Delhi).
Earlier this month, Honda's compatriot Yamaha had said it is working towards rolling out the world's cheapest motorcycle, priced at around $500 from India, with setting up of its fifth global research and development centre here.
Yamaha had said India will become the global hub for development of low-cost bikes, which will be exported to other countries in Africa and Latin America.
HMSI's two 'Dream' range of motorcycles -- Neo and Yuga -- will compete directly with market leader Hero MotoCorp's best-selling Splendor series of bikes, which are priced between Rs 42,250 and Rs 50,650 (ex-showroom, Delhi).
Talking about sales target of 'Dream Neo', Mr Muramatsu said HMSI is aiming to sell 3 lakh units of the model in 2013-14.
"We are targeting to sell 5 lakh units of Dream Yuga. So, our Dream series will contribute a total of 8 lakh units in this fiscal," he added.
When asked if the company will continue to roll out more models in low-cost segment, Muramatsu said: "We will have a full product line up, but our priority will be the volume market. We will focus more on low-end two-wheelers."
The company will try to minimise the cost by having more localisation in all its products, he added.
At present, the average level of localisation of the HMSI models are 97 per cent, while the new bike Dream Neo has about 99 per cent of local parts, he said.
Talking about exports, Muramatsu said: "We are looking to increase our overseas sales to 1.7 lakh units this fiscal from 1.5 lakh units in 2011-12."
Currently, HMSI exports its models to Sri Lanka, Nepal, Latin America, Africa and Europe, he added
The company will also sell vehicle components to Bangladesh to roll out two-wheelers from an upcoming completely knocked down plant there, he said.