Tata Motors launched the Nano in 2009 with an amazing amount of hype. The 100,000-rupee (less than $2,000) car was supposed to usher a new generation of Indian car ownership, and some predicted it would expand the nation’s auto market by 65 percent.
It was not to be. Tata has sold just 229,000 of the cars since they were introduced, and sales are down 86 percent this year. For one thingm the “one lakh car”—a lakh is an Indian unit of 100,000—has now crept up to almost 1.5 lakh. The marketing behind the car was off—upwardly mobile families aren’t attracted to a tiny, noisy, egg-shaped car whose entire raison d’etre is its price tag—and foreign competitors have now introduced other low-cost alternatives in the Indian market. (The fact that Nanos have an unfortunate habit of catching fire hasn’t helped either.)
The Nano may not have revolutionized the global auto industry as much as its creators hoped, but it’s political legacy may be more significant. The world’s cheapest car is a big reason why Narendra Modi is about to be sworn in as prime minister of India.
In his must-read 2012 profile of Modi, Vinod Jose, executive editor of the Caravan, writes, “If there was one decisive turning point in Modi’s reinvention—the moment when his image as a militant Hindutva politician was first eclipsed by his new reputation as a pro-business development man—it arrived in October 2008, when the Tata Nano came to Gujarat.”
The Nano was originally supposed to be produced in Singur, in West Bengal, and a factory was fully constructed to build it, but the local government’s use of an antiquated law to seize farmland for the factory led to months of protests by farmers demanding compensation. Chairman Ratan Tata eventually had enough, and in 2008 announced that he was moving the operation in its entirety 2,000 miles to Sanand in Modi’s Gujarat.
Modi wooed Tata with a generous package of tax breaks and bought out farmers for the land needed to build the factory. The deal got global attention, and soon Ford and Pugeot were at Modi’s door asking for similar packages. The “Gujarat miracle” was born, and Modi’s image as an efficient and tough-minded leader committed to development replaced the one of a fanatical nationalist who looked the other way when more than 1,000 people were killed in communal rioting.
Jose is skeptical about Modi’s credentials as an economic miracle worker, noting that even as Gujarat posted impressive GDP growth, it lagged behind other states in foreign direct investment, poverty reduction, and measures of wellbeing like childhood nutrition. Some also say the benefits of Gujarat’s economic growth haven’t been equally shared by all of the state’s religious communities.