Microsoft and India's HCL Infosystems said they would work together to develop a Windows-based laptop PC that will be the cheapest available in any market worldwide.

The system, called the MiLeap H Series, will run Windows XP Home and will sell for 17,000 Indian rupees, or about $425 (U.S.). The MiLeap H features a 30-GB hard drive and is "broadband ready," the companies said in a statement Friday.

Microsoft chief operating officer Kevin Turner, at a launch event in Mumbai, said the offering is meant to "empower Indian consumers and businesses with the latest and best that technology has to offer."

Microsoft, along with a number of other vendors, is eyeing the low-cost PC market as a major growth opportunity -- particularly in emerging markets where average incomes pale compared with the West. The company recently announced that it would extend the life of its Windows XP operating system, but only for deployment on low-cost systems.

Low-cost PCs that run on Linux, from Asus, Everex, and other vendors, also are becoming increasingly popular as some computer users conclude that mainstream systems running the Windows or Macintosh operating systems are overpowered for their needs.

Also on Friday, Microsoft and HCL said they would jointly establish a new Center of Excellence in India, staffed with 500 programmers trained to develop Microsoft-based solutions for various industries in the country.

India is becoming increasingly important to Microsoft -- and not just as a source of low-cost programming talent. Domestic spending in India for IT services will grow by about 43% in 2008, according to Indian IT trade group Nasscom.