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This is the updated version of the world’s cheapest car: the Tata Nano. Tata prefers to give its prodigy sequential updates annually to make it more appealing, rather than massive overhauls less frequently.

That’s understandable, as a whole load of updates at once could push the price up – which would never do. So, over the last few years, the Indian domestic market has seen the addition of gloveboxes, a left wing mirror and an audio system for this car, and improvements to the suspension, seats, ergonomics, engine and gearbox. By which means the Nano has become far improved from the one Tata Motors launched back in 2009.

For 2014, there’s just one mechanical update, but it’s a big one. As you may have guessed from the suffix given to this latest version – Twist – the Tata Nano is now available with power steering. It’s a brushless electric power steering (EPS) unit that’s been developed specially for the Tata Nano Twist by ZF in collaboration with Bosch.

In a nutshell, that steering system has made the Nano much better suited to its purpose – of being a compact runabout for the city.

On the non-power-assisted car, you have to wrench the wheel around at parking speeds and low-speed agility is really poor. All the effort and concentration required meant you often preferred not to change course and just dive in and out of gaps in the traffic.

Not anymore. On the new Tata Nano Twist, you can twirl the wheel with your index finger even when the car is stationary. Parking is a breeze, and the sensation of wiggling the car’s teeny dimensions into a small parking slot is now rather gratifying.

The biggest step forward, however, presents itself when you are on the move. Driving this car at regular speeds is just so much more relaxed. The steering hasn’t been made super-light and totally devoid of feel, either.

You get a nice combination of low effort and some road feel, and this allows you to enjoy the easy manoeuvrability and the responsive nature of the chassis much more. It’s fair to say the power steering elevates the whole driving experience.

What’s also nice is that the speed-sensitive steering cuts off, quite seamlessly, at 50mph, allowing you to get greater centre feel at higher speeds, to the benefit of high-speed stability.

Tata has also given the car a segment-first ‘active return’ feature that returns the steering wheel to the centre after you have twirled it one way. This is needed due to a shortage of the front axle weight to help return the steering-to-centre naturally; the system uses torque sensors and the steering motor to lightly push the wheel back towards the centre position. It works reasonably well, but best once you’ve become familiar with its quirks.

Tata Motors gave the Nano its last round of updates in June 2013, and the only change to the cabin for 2014 is the new instrument cluster. It’s far more detailed than before, with LED bars for the fuel and temperature gauges, and a digital trip computer that now features live fuel consumption and distance-to-empty readouts. We’d have liked a tachometer, though.

The Tata Nano is still some way from being perfect. It’s fairly obvious that wider front tyres, larger mirrors, a five-speed gearbox and more modern brakes with better pedal feel would all improve it significantly.

But the cheapest car in the world will never come without a compromise or two. For now, the combination of this new power steering system and better interior – together with the improved ride, comfier seats, lighter clutch, better gearshifts and enhanced refinement that the car has inherited since launch – make the Tata Nano Twist finally feel like a complete city car.

At Rs 2.36 lakh before showroom taxes in Delhi – just under £2500 as these words were written – the top-end Nano Twist XT (the only variant with power steering) costs little more than the outgoing range-topper. So, it's still great value for money, considering its combination of space, fuel economy and comfort.

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