The design of the Rs 1 lakh car by Tata marks the coming of age of Indian manufacturing. Much of Indian manufacturing has used technology bought overseas, received technology through foreign collaborations, copied products sold overseas, sometimes using reverse engineering to arrive at a good copy, but rarely developed an original product by itself. This is clear from the data on patent filings. The total number of patent filings by residents in India per million population was 3.40 in 2004-05. The world average was 250.72. The number of patents in force in India in 2004 was 6,406; it was 1,82,385 in China, and in force worldwide during 2004 was 5.4 million. The development of the Tata Nano is believed to have led to the filing of 200 patents. The small low-priced car from Tata is the first product from India — not just among cars — that has been designed and developed from scratch to fit a price target. Every component has been designed and costs negotiated keeping in view also the likely production and sales volumes. The end product is a car and not a simulation of one.

We must celebrate this triumph of Indian engineering design, development and scaling-up. It will without doubt set off a rush of similar attempts by Indian companies in many industries, not merely transport vehicles. It marks the coming of age of Indian manufacturing, not as imitators but as innovators. India’s pathetic 15 per cent share of manufacturing in gross domestic product versus 50 per cent for services reflects the low levels of consumption in India. Manufacturing contribution must grow quickly if our people are to lead better lives. The Tata Nano presages this surge in Indian manufacturing.

The bandwagon of cheap car manufacture will roll in India and elsewhere, following the Tata Nano. (Bajaj has already unveiled a concept car to reach the market in three years). They would all have benefited from the work of the first mover, Tata. American and other overseas car-makers will study the Tata car to find out how Tata managed the low cost and yet made a profit. We can expect that many manufacturers of other products, not only cars, will want to start designing and manufacturing in India.

It is too late to moan the resultant boom in cars and in consumption generally. India has bought the Western consumption model, not the austerity of Mahatma Gandhi. The Western consumption model has severe adverse effects on the world’s stock of depleting natural resources, environment, ecology and climate. It introduces into society a strong competitive element in consumption. People want what others have, and more. The communications revolution has made these desires common globally. To deny many the comforts (like cars) enjoyed by a few is discriminatory. If there is unrestricted usage of cars, we will severely damage the quality of peoples’ lives as roads get more crowded, parking becomes even more difficult, pollution increases as the number of cars in use rises manifold, and the country spends even more on importing oil. But it will be impossible to put the genie of enterprise and innovation of which the Tata Nano is the prime example, back into the licensing bottle. The new Tata low-priced car is a feather in India’s engineering and innovation cap. It also enables much wider automobile ownership and usage than was ever deemed possible.

There are few alternative paths to more cars on the roads. We could voluntarily change lifestyles and restrict the usage of such comforts even while owning them. Or, the government could do what it did for 40 years, that is, restrict the production of these small cars.

We must never go back to the era of licensing of manufacturers by the government where some bureaucrat decides what can be produced and consumed. We need enterprise and innovation, badly hindered during 40 years of licensing. People should not be prevented from buying cars or anything else. The answer to more cars is to build more roads and quickly, control traffic and use pricing — for parking, petrol, entry into crowded areas, pollution standards, and so on — to restrict the use of cars.

Cars priced at Rs 1 lakh and around Rs 1.40 lakh on the road are about half the price of presently available cheap cars. We can expect the prices of second-hand cars to drop to levels (for the cheapest) that are close to prices of two-wheelers. Sales of scooters and, to a lesser extent, motorcycles will dive. Rural use of motorcycles might continue to increase as will niche use of specialized two-wheelers, and use by the really low-income groups. Many scooter-buyers will graduate upwards to cheap or second-hand cars. The two-wheeler buyer will also consider the comparatively high running and maintenance costs as well as costs of parking for any car, apart from the higher capital costs even for the Tata Nano. These factors could keep many prospective buyers of two-wheelers, as well as their present owners away from the Nano and its followers. But as second-hand car prices drop further, the number of cars will increase exponentially, with an explosion of four wheeled vehicles on the roads.

With relatively less two-wheelers to cars, there will be fewer fatalities from road accidents. Delhi figures for some years suggest that out of 1,800 road deaths each year, two-wheelers account for around 600 while four-wheelers account for about 90. Given that the Tata car has passed collision norms, we can expect less road accidents caused by it. Many more affordable taxis will replace the autorickshaws, their quarrelsome drivers, noxious fumes, and traffic nuisance. They will supplement inadequate public transport in our cities but add to the congestion on the roads.

The explosion in the demand for and manufacture of cars will act as a terrific stimulus to the economy as it did in the US and has done in many other countries. This has already begun to happen in India and will now accelerate. Many industries, from steel, aluminum, rubber, plastics and glass, to service industries have done very well over the last few years as a result of the automotive expansion and will see a further boom. Exports of cars, auto parts and accessories will also shoot up. Employment in many sectors, from parking, car servicing, repairs, auto-parts and spares, accessories, sales and others will rise. The Tata car presages a bigger boom in all these, as India moves to become an important manufacturing economy. Road construction has already stimulated the Indian economy, as it did in the Eisenhower years in the US, with the building of highways. More roads will further stimulate our economy.

The issue with the new Tata Nano is not that it has arrived. That must be welcomed. It marks a major step forward for Indian manufacturing. It enables more Indians to aspire to owning cars and other consumer goods and will stimulate the economy.

The problem is the inefficiency and lack of ambition and foresight in our governments. They have been unable to anticipate demand in a fast growing economy where many do not have access, but aspire to greater consumption. There are many examples: tardiness in airport development, inadequate capacities planned for new airports, power generation and distribution, and above all, construction of roads, parking spaces, bridges, culverts and flyovers, to accommodate the road traffic. Perhaps the new model of public-private partnership used for the expansion of Bombay and Delhi airports, many road projects, and other infrastructure construction now envisaged, should be put to more general use so that there are more such projects, built faster and of better quality. If government agencies are kept away from the execution of such projects, we might see a faster expansion of these facilities.

Don’t let us condemn an extraordinary engineering achievement. Let us find ways to integrate it into a good infrastructure and pricing of the services that these vehicles will consume.