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Spinning Wheels

Dan McDougall

13th March, 2008

‘This is the Indian dream!’ shouts Mohit, clutching a tattered plastic bag as he joins the impatient throng gathering at Hall A of the Auto Expo in New Delhi. Around us more than 100,000 Indians are aggressively jostling for space and a precious glimpse of the £1,200 Tata Nano, the world’s cheapest car. It is a vehicle that, put simply, costs less than the optional DVD player on the new Lexus LX470 SUV.

‘It is truly the people’s car,’ he says with tears welling in his eyes. ‘It is for all of us.’ As he speaks he drops his bag, which spills out its contents, a runny fusion of soupy lentils and dried up roti – his lunch. On the floor beneath Mohit’s torn and grubby sandals are dozens of black-and-white promotion flyers for the Nano. Each one bears the grainy but unmistakable image of the Model T Ford, a car that, in 1908, changed the world. History, as they say for good reason, has a canny habit of repeating itself.

The first affordable, mass-produced car in the world, the Model T retailed at a presentday equivalent of £2,000. Henry Ford’s ‘Tin Lizzie’ revolutionised work and economics as much as transportation. Ford used assemblyline techniques and standardisation of parts and tasks to create vast economies of scale in his River Rouge plant, then the largest in the world – creating a method of manufacturing we now call ‘Fordism’.

In present-day India we now have Tataism. Ratan Tata, the billionaire Indian industrialist is, in his own words, about to revolutionise the car industry and, in the process, will bring the option of owning four wheels to hundreds of millions of his countrymen.

In an age of unbridled optimism and consumerism, the Indian public is being whipped up into a frenzy over a car that has yet to hit the showrooms.

Small wonder since the Nano costs half the price of the cheapest car currently on the market, the Suzuki Maruti 800. According to economic forecasters CRISIL (Credit Rating Information Services of India Ltd), at no more than 100,000 rupees ‘the new price point translates into a 65 per cent increase in the number of Indian families that can afford a car.’

But rather than simply become a symbol of growth and modernisation for a nation, Tata’s ‘People’s Car’ has increasingly come to symbolise a David and Goliath battle between India’s super-industrialists and the impoverished farmers who claim their land was seized by the government to make way for the new plant that produces the Nano.

Not only that, the creation of the vehicle is – finally – galvanizing India’s long-time marginalised and unpopular green lobby, which is growing increasingly concerned at the unbridled consumerism gripping the nation’s emerging 300-million-strong middle class.

‘Wheels truly show your status in India,’ says Bengali market stall owner Venkat Banarjee, shouting above the rush-hour traffic heading across the Hoogli river. ‘More than watches or clothes or even your home. If I had a four-wheeler I would have better marriage prospects in my village. I would be respected.

‘I have an old Honda motorbike, so I am looked down upon. To be able to afford a proper car, with four wheels – that would change my life; it would turn things around.’

So, four wheels good, two wheels bad, is a new middle-class mantra. Now, thanks to India’s enigmatic billionaire Ratan Tata – hailed as nothing short of a messiah for bringing the ‘People’s Car’ to India – the world’s fastest-growing consumer market is about to be rewarded for its ambition.

The Indian Mini

Tata Motors is India’s largest commercial vehicle maker; its logo appears on buses, dump trucks, ambulances and cement mixers. In recent weeks the firm has been linked with a buy-out of Jaguar, and the domestic and global auto industry is keenly watching the development of its ultra-economy car, expected to be on sale by the end of the year.

The Tata Nano is currently taking shape in a controversial ‘Special Economic Zone’ in Singur, on the outskirts of Kolkata. The ‘Indian Mini’ or the ‘People’s Car’ is the culmination of a long-standing dream for Ratan Tata, which he believes will offer the ‘miracle of personal transport’ to India’s masses and make his company a big player on the international stage. Few expect it to fail.

The car is thus a triumph – not of great invention, but of a new engineering philosophy rising out of the developing world, one that has the potential to change the way that cars everywhere are made.

Small, low-cost cars such as this are poised to become the next frontier for the global auto industry. As petrol prices continue to rise, consumer tastes around the world are shifting toward smaller, more fuel-efficient cars. Global demand for small cars is expected to grow by 30 per cent to 27 million vehicles by 2013, with the growth coming mostly from developing markets.

In India, the Nano launch has triggered a small-car revolution. With the Tata People’s Car now a reality, another Indian company, Bajaj, has announced the impending launch of the Bajaj-Renault small. The Indian firm Hero Group, best known for making motorcycles, is also said to be working on a mini-car, possibly in conjunction with a Canadian company. Maruti-Suzuki is developing what it says will be a ‘competitively’ priced 660cc car. Recently The Times of India newspaper reported that a low-cost computer manufacturer, Xenetis, also has plans to make a budget car.

Pollution Matters

One of the key questions surrounding the world’s least expensive car is why exactly is the Nano so cheap? For a start it has no radio, no power-steering, no power-windows, no air conditioning and only one windshield-wiper instead of two. The steering-wheel shaft has been rendered hollow and the car uses an analogue speedometer, which is less accurate but also less expensive than its digital equivalent. The boot fits little more than a briefcase and plastics and adhesives replace metal and bolts in certain parts.

Yet Michael Walsh, a pollution consultant and former US Environmental Protection Agency regulator, says that a car as cheap as the Tata is likely to lack the complex technology to maintain its initial level of emissions and that without such technology cars could pollute four to five times their initial amount before long. According to Walsh it is ‘impossible’ that emissions would stay low over the lifetime of the vehicle.

Climate change expert and joint Nobel Prize winner RK Pachauri, chairman of the Intergovernmental Panel on Climate Change, has also expressed concern, saying that the idea of a 100,000-rupee car bringing motoring to a genuinely mass market in India is giving him ‘nightmares’.

Eminent environmentalists like Pachauri warn that with Indian emission norms still lagging several years behind those of the European Union and pollution levels at critical levels in many of the larger cities, the race to produce a super-cheap car is likely to impose massive costs on society that are not adequately reflected in its sticker price.

Official figures show that fine particles of pollution, known as particulates, have reached ‘critical’ levels in more than half the 90 Indian cities monitored by pollution control authorities.

‘What we are really worried about is the appalling congestion in India’s biggest urban areas,’ said Anumita Roychowdhury, associate director of the Centre for Science and Environment in New Delhi. ‘Once people start using cars it will be hard to get them back, and selling cars for bottom dollar and encouraging banks to offer finance plans is a recipe for disaster. Tata reckons he will sell a million of these things a year. This will be an environmental disaster. In New Delhi, public transport manages more than 60 per cent of demand. Our immediate policy should be to retain and protect this, so that users do not make the move to cars.’

Other pertinent concerns continue to arise: for one, where exactly will all these cars fit in India’s appallingly rutted and already congested highways, road systems that are among the deadliest in the world?

Many environmentalists also believe the new vehicle will simply clog up already busy and broken roads, and add pressure to an infrastructure that is buckling. They stress the need to develop efficient, modern and affordable public transport, especially in cities such as Delhi, which now has a new metro system, but also a bus service that is overloaded and often deadly.

Saviour of the road?

Tata counters that the car may actually prove to be the saviour of road safety. In Delhi alone, approximately 1,800 people die on the roads each year – about one-third of them on twowheelers, while only five per cent die in cars. In Mumbai more than 3,000 die every year on the city’s dangerously overcrowded commuter rail system alone.

Ratan Tata himself recently cited safety as a key motivation for developing this car.

‘I observed entire families dangerously riding on two-wheelers,’ he said. ‘The father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family.’

Tata’s key argument in favour of the Nano is compelling only when compared to the West. Though India’s roads are often jammed with motorbikes and three-wheeled autorickshaws, its total number of cars is very modest by world standards. Figures suggest a vehicle density of just seven cars per thousand people. By contrast, Australia has 536 cars per thousand, the US has 477 and the UK has 373.

Yet, while such a figure gives India fewer than 10 million cars, the number of sales is still rising extraordinarily. Last year, more than one million cars were sold, and every year the number being registered increases by 16 per cent. In recent years, New Delhi alone has seen some 200,000 new cars being registered annually. Last year was exceptional – a total of 300,000 new cars were registered. And such figures only include those vehicles being driven legally.

Anumita Roychowdhury believes the Tata car is making driving too affordable and is ignoring the congestion and pollution pressures such a trend would create.

‘To stop that, you have to invest in public transport and you have to increase taxes on cars to reflect the true cost of driving,’ she says. ‘At the moment we’re caught by a double whammy: the manufacturers are competing to build the cheapest car and we lack the correct public policy.’

The Indian government firmly disagrees. Manmohan Singh, India’s prime minister, last year even launched a national ‘automotive mission plan’ to make the country the global destination of choice for the design and production of cars and car parts. The plan targets car sales of £73 billion and the creation of 25 million jobs in India by 2016.

Battling the new colonialism

In Singur, West Bengal, where the People’s Car is currently being turned from dream to reality in a state-of-the-art production plant, hundreds of farmers, forcibly evicted from their land to make way for the Special Economic Zone granted to Tata by the government, are refusing compensation ‘payoffs’ for what they have labelled an oldfashioned colonial ‘land-grab’.

They accuse Tata of seizing their land in order to create the Nano factory. Instead of a public consultation, a colonial-era land law from 1894 was exploited by West Bengal’s local government in order to acquire the land for the corporation.

This situation is not unique. Over the last 12 months the Indian government has received applications for 250 similar Special Economic Zones, which involve turning huge tracts of land into gated business enclaves with middle-class townships attached.

This situation is not unique. Over the last 12 months the Indian government has received applications for 250 similar Special Economic Zones, which involve turning huge tracts of land into gated business enclaves with middle-class townships attached. The zones are controversial, but the message coming from government is simple: this is a time of change and development for the better, and the zones are the only way to attract foreign investors.

The land seizures had led to bitter clashes between farmers and the government. Around Singur and neighbouring Nandigram, in another Special Economic Zone – labelled a ‘Special Exploitation Zone’ by detractors – thousands of people have been injured and more than 20 local farmers killed as protests turn to clashes with police.

Protesters claim the land seized for the development of the plant is the most fertile on the plains of Bengal. The government denies this, and calls its compensation package ‘the most exemplary in the country’ and claiming the majority of the 14,000 farmers have already accepted it.

Driving across the monsoon-lashed landscape of Singur, agricultural life is still thriving. Long, narrow channels of monsoon water irrigate fields of rice, mustard, potato and hemp. Most farmers are on the third crop of the season.

‘This plant is the absolute end of us because we know more will follow or it will expand and we will be squeezed out and forgotten about,’ says farmer Bishnupada Mondol.

‘As things stand, many of the farmers here have accepted the cash, but they don’t realise what the long-term future holds. The money they are being offered simply won’t last. People here have large families and they will spend the money quickly, then look around them and realise they have no land, no income and no prospects. I, for one, will not give up my land.’

Victory for the poor man?

Ironically it is the farmers and not the environmental lobby who are having a major impact on India’s own version of the Industrial Revolution. In India land, above all else, evokes raw emotion. Poor farmers cling to it as their only source of food and sole asset. Government and industry want this scarce resource for development.

In truth, India’s rural poor are resisting the rush for development at every turn.

In Nandigram, close to the Tata plant, where local farmers are fighting the creation of an Indonesian Chemical Plant, more than a dozen protesters have been killed in the past year. Late last year the villagers of the troubled district won a victory that threatens to derail the biggest push for economic and industrial development since India won independence 60 years ago. After the shootings, the Communist government of West Bengal, which has won plaudits from international big business for its Chinese-style attempts to attract investment, cancelled the Nandigram Special Economic Zone project.

‘This is a great victory for the common man,’ says Sayad Abdul Samad, who helped organise the resistance. ‘Our people have suffered one imperial land-grab under the British and now it is happening again. But we will never give in. As long as we live, we will never give up our land. We are happy here. We don’t want factories, we just want to live in peace.’

Ratan Tata may talk grandly of helping solve the transportation needs of poor Indians with his new car, but in reality the Nano is targeted solely at the country’s newly aspirational middle class, which has new buying power as a result of the country’s economic growth of nine per cent per year. The overwhelming majority of India’s population of 1.1 billion, however, more than 800 million of whom survive on less than 50p a day, will not be able to afford the car.

But while the People’s Car may realistically only be available to a small percentage of Indians, given the scale of the country’s population and a middle class estimated at more than 300 million, the possibility for sales are still huge.

The Indian consumer is roaring for action. Most Asian success stories have been ones in which the government forces its people to save, producing growth through capital accumulation and market-friendly policies.

In India, the individual is king. Young Indian professionals don’t wait to buy a house at the end of their lives with their savings. They take out mortgages. The credit-card industry is growing at 50 per cent a year. Sales of fridges, cookers, televisions, furniture and DVD players are booming as never before.

Personal consumption makes up a staggering 67 per cent of GDP in India, much higher than China (42 per cent) or any other Asian country. Only the US is higher, at 70 per cent. Indian businessmen are giddy about their prospects.

The bitter truth is that the environmental lobby in India may already have lost the battle to consumerism. Car culture is already alive and well in the country. More than 1,200 exhibitors took space at the recent week-long car show in Delhi.

Indian industrialists say that if they do not tap the new middle-class market – which is set to expand to 583 million in 2025, according to management consultants McKinsey – then their Chinese and western rivals will. International consultancy firm Roland Berger estimates that by 2010 an additional 30 million Indian households will be able to buy a car.

According to Anumita Roychowdhury, however, India’s poor may yet have the biggest say in the future of the country.

‘The advance of modernity has caused social dislocations, stirred passions and provoked violence in ways new to a land where religion and caste have long been the great hate-makers,’ she says. ‘Urban slums are indescribable pits of misery. Deforestation has led to catastrophic floods, and pollution of air and water goes virtually unchecked. Nevertheless, industrialism and its effects have become a predominant fact of life for millions of Indians. They primarily shape, and in many ways control, the Indian experience at this stage of its long 5,000-year history. It is the poor who will suffer most from industrialisation and exploitation, and it is the poor who will do most to stop it.’

This article first appeared in the Ecologist August 2008

 

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