Tata Nano and the Birth of a Middle Class

CAMBRIDGE, MA–It’s been a pretty stellar decade so far in the world’s largest democracy. The economy is growing at nearly 9% a year, GDP per capita has nearly doubled, and its largest multinationals are on a global feeding frenzy, gobbling up anything they can get their rupees on.

From steel makers and aluminum manufacturers to fabled liquor empires and Britain’s beloved Tetley Tea, corporate India is expanding aggressively in its quest to unseat Japan and China, Asia’s two incumbent economic powers. Perhaps not surprisingly, capitalism suits the former British colony well — at least in the aggregate — and with the birth of the world’s cheapest car and a play for Ford’s premium European business, Tata looks set to usher in a new era of Indian industrial leadership.

It isn’t just that the Nano will cost a symbolic 1 lakh (US$2500) , or that its 33 horsepower engine will reach speeds of 65 miles an hour, or that transportation in India will be revolutionized in ways that inventors of the Segway only dreamed. More important than the car itself is its underlying raison d’etre: the emergence of India’sswelling middle class, set to grow from 50 million today to nearly 600 million by 2025. Following similar demographic and economic trends in China, these first-generation middle class consumers will fuel the next cycle of global economic growth for automobiles, electronics, mass media, food, and pretty much everything else we’ve come to take for granted over the last fifty years.

The story isn’t all roses, but the challenges of sustainable and responsible economic development are slowly being addressed. Technological advances in agriculture, structural advances in micro-finance and micro-capitalism, infrastructural developments within and between major urban centres, and demographic trends will continue to fuel investment and innovation across the continent.

That said, for those of us living in the peaceful economic bosom of the G8, India’s latest foray into industrial design and manufacturing could spell the beginning of the end of heavy industry in Western markets, and fuel the push to reinvent the economies of the developed world. Traditionally, systemic shifts of this magnitude involved sizeable labour migrations and ultimately some measure of political instability.

One can only hope that Canadian policymakers — particularly in auto-dependent Ontario — are students of economic history and move to educate and innovate away from their 20th century manufacturing addictions before the knowledge-based industries of the future are too far out of reach.

3 Comments
  1. Will be interesting to see what torrents of Western enviro-hypocrisy will be unleashed … Although this could be just the thing to drive oil up to $5000/barrel, and so who knows, the planet may benefit. I do know this: now’s the time to open up a driving school.

  2. What a refreshing post – free from all the false sermonizing and snide rumor-mongering about its supposed “lack of safety” and “poor emmissions”.

    I guess there are still some honest and intelligent people around in the Western world.

    Glad to see that the Anglo-American tendency towards lies and self-serving hyperbole haven’t infected the author of this blog.

    Thank you!!!!

  3. Despite the name (I use HemiRT for everything) I actually appreciate this car. I am going to say that it does lack some important safety innovations (airbags to name a big one). But it is safer than 4 people riding a 1982 Vespa, or 90 people riding a bus designed for 35.

    I will not be so shortsighted to say this car will be responsible for for global warming, or even a major contributor. Oil won’t shoot up any faster than it would otherwise, as for every Nano put on the road in India, an old polluting dinosaur will be crushed into a cube.

    What? A car guy saying it’s ok to get old cars off the road? Yes, it’s true. New cars pollute less than old cars. The Continuously Variable Transmission will also help with less wear and replacement. These people in India have to go from place to place just like people in America, Europe, or Japan. And if this has major automakers rethink what people consider the price of a car to be (mine was $40,000 after fees, taxes, taxes, fees, and financing) it may just be good for everyone.

    If you consider the burden of ownership to be an environmental deterrent to people “wasting cars” then you need to re-evaluate what the life cycle of a car is. By the way, it’s 15 years for most (though I expect these to be pretty wore out after ten). After that, cars leak oil, burn fuel ineffeciently, need more frequent repairs, and ultimately cost more to run then their worth.

    These Nanos are not terribly inefficient and better yet, if each pollutes half as much as the car it replaces, saves more lives with the improvement in safety over rickety motorcyles, and makes cars more affordable worldwide, I can only applaud for a product that will see a very profitable life cycle in the marketplace – assuming it is build with quality and care.

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