according to me launching TATA nano with airbags isnt a wise idea as it will just increase the cost of the car, which is the major concern of the market that nano is targeting. and every penny saved matters to people in india. another thing about getting airbags fitted is that although they can fit those cheap $10 airbags, but when the repair bill of a crashed airbag equipped nano will be in the hands of the owner he would want to sell the car that instant.
and also as cooldhaya pointed out nano would be mostly driven in city and airbags are not much of a use in cities as they are on highways.
nano europa for sure would be having 2 airbags but thats on a different continent in a different market scenario and at a different price.
coming to the diesel power, i think it will sell. india is slowly becoming a land of dieselheads rather than petrolheads