The 'friendly war' between the Indian cities of Mumbai and Hyderabad over the chance to host the first Formula One race in the country stepped up a gear this week, with both sides claiming to have done the deal to bring the grand prix circus to town.

According to reports in the Indian press, chief minister N Chandrababu Naidu is confident that the race will be in Hyderabad, having apparently secured the valuable signature of one Bernie Ecclestone on a contract, but counterparts in Mumbai remain convinced that they still have every chance of attracting the event

"F1 is not going to Mumbai," asserted Naidu, claiming that the Andhra Pradesh project in Hyderabad was well on course to be completed ahead of its rivals in Karnataka and Maharashtra.

Naidu also pointed out that his officials were in constant touch with the powers that be in Formula One, following two rounds of talks already held and with plans for further negotiation in the pipeline. Only last month, a team led by state finance minister Y Ramakrishnudu visited London to meet with Ecclestone, and left feeling assured that the first Indian GP would take place in Hyderabad in 2007.

Moreover, after the second round of talks with Ecclestone in London just two days ago, Hyderabad officials believed that they had secured a 'lock-in-period', during which no other party could enter into negotiation to stage the race. However, that illusion was clouded when the Mumbai team welcomed a delegation to its project.

Maharashtra chief minister Sushil Kumar Shinde is due to meet with F1 representatives again this week.

"They have informed us that they will be coming for discussions with me," Shinde was quoted as saying, "Earlier plans [were to] conduct the race near Hyderabad, but now they want it to be shifted to Mumbai."

The Hyderabad track alone is estimated to be priced at six billion rupees, while the allied infrastructure like hotels, hospitals, amusement parks and road network would cost another five billion. The government is apparently attempting to tie the development in with the building of an international airport nearby, which would help to fulfil one of the conditions - the ability to transport the circus right to the door - laid down by Ecclestone's company.

The state government has also identified 1350 acres of land at Gopanapally, on the outskirts of Hyderabad, for the project, with 750 acres set aside for the track and its immediate facilities. The remaining area would be used for the projected hotels, etc. The cost of the land alone has been set at more than 500 million rupees.