Nano is beautiful

The market. For neo-Luddites who, while benefiting from the market have conveniently forgotten its rules, the market is an arena where gladiators of today fight for space in the minds and wallets of consumers. An amphitheatre where entrepreneurs put together ideas, money, men and material to create products. Like in any other industry, in the arena of automobiles, there are rules that define the game. As long as gladiators play by the rules, they can create any product they like. Nano, for instance. It is Euro 4 compliant, a generation ahead of its time, which means it’s less polluting than the next car. It has taken safety tests that many existing cars haven’t and cleared them, which means it’s safer.

And as far as congestion on the road goes, it’s simply not Tata’s business. India’s roads have been clogged for many years now. That governments across states and the Centre could not plan for the prosperity that would hit them between the eyes in just four years was not surprising. Work on roads — highways, expressways and intra-city networks — has begun and going forward should clear the mess. But to say that Nano will clog roads, and not any other car, bike, bus or truck, is giving Nano too much and unnecessary importance.

For a 623 cc car that’s 20 per cent smaller than Maruti 800 with 20 per cent greater volume — a space that’s clearly visible in Hall No. 11 in Delhi’s Pragati Maidan and in tune with its sister Indica’s ‘more car per car’ — that’s a lot of needless and unnecessary burden. At a broader level, to say that Tata’s small car should not hit the market because it will give so many poor Indians (and some African, Latin American and Southeast Asian countries who would like Tata to manufacture and sell the cars in their countries) access to cheap transportation, a process by which large masses of people buying these cars will pollute this planet’s pristine air, is nothing but rubbish.

It is the argument of the wealthy to keep their little spaces as exclusive as possible. It is the contention of the North against the South, the rich in South against their not-so–rich citizens. The rules of the game cannot change simply because the North chooses to change them now. By no means am I saying that just because the North has polluted this planet enough, the South must add its two bits. Of course, we need clean air, smooth roads, safe cars. But the rules for Tata’s small car in particular and emerging economies in general cannot be different from the rest of the world’s. If there are standards, they must be universal; if they’re not good enough, change the standards. But if a company is offering a product within the regulatory space, any opposition to it is best ignored.

One question that goes beyond Nano is of profitability: will Nano drive Tata Motors’ profits higher or has the company, in a bid to keep the Rs 1 lakh price tag intact, taken a beating on margins? Tata refused to comment or be drawn into any discussion regarding profits — or anything other than Nano, for that matter. But the answer came from another market that reads signals and reacts in nano-seconds: the stock market. On the National Stock Exchange, the Tata Motors share price fell by 2.7 per cent to close at under Rs 750 — 23 per cent below its 12-month high. Whether it’s Nano to blame or a variety of other factors remains to be seen.

In the coming weeks and months, much will be written on Nano, for it affects not only the fortunes of a company worth Rs 30,000 crore, but the industry itself. Will Maruti lose some of its customers and the resultant marketshare to Nano? Will Honda’s buyers trade two wheels for four? Will it be Nano or a host of other inexpensive cars that consumers will buy? Will the 250,000 Nanos that roll out of Singur (the Rs 1 lakh price tag is ex-Singur) by the second half of the next financial year have any political dents on it?

On the last question, Tata did have an out-of-the-way comment. According to him, investing in West Bengal was a “leap of faith” since several other states wanted him to invest there. He also said the state government has been “supportive in difficult times”. Whether that was the beginning of an emerging diplomat or the truth, only time will tell. But the fact that Nano also had to carry the burden of India’s fragmented political economy is something that corporate India will have to increasingly learn to live with.

If despite carrying all these burdens, Nano managed its 4-door, 4-seat, 34-patent, 2-cylinder, 20 km per litre, Rs 1,700 crore investment debut, it is as much a victory for Tata as it is for India. Everything else, including the troika, is a fig leaf that reminds me of the opposition that noise-makers and even some lawmakers in the US had to outsourcing of jobs to India. But in that debate there was more honesty — Americans were losing jobs to Indians and were concerned; their concerns were addressed by the industry here and today those noises have receded. The debate around Nano is pregnant with deceit. As we celebrate Nano — even diehard, cynical journalists from across the world gave Tata an applause — I believe, the question to ask is: who benefits if Nano remains off the roads?

gautam.chikermane@expressindia.com