Tata Hits Obstacles in Its Quest for a “People’s Car”

But the company is quietly pushing hard towards production

By Brendan Moore

07.22.2007

As reported here, and in many other media outlets, Tata of India is heavily involved in the development of a “People’s Car” (also referred to as the “Indian Mini”) that it plans to sell for 100,000 Indian rupees or approximately $2300 USD. The Suzuki Maruti 800, currently the cheapest car sold in India, retails for around $4700.00 USD. Tata states that the planned car will be “a real car, not as small as a Smart, and it does not have plastic curtains, and it does have a roof”, and production will start by 2009 calendar year at the latest.

All well and good, but on the way there, Tata has created a public relations nightmare in India. And it is a common theme as far as P.R. nightmares go; it is the classic “Big Guy against Poor Little Guy”.

The West Bengal government of India has used an obscure colonial-era law from 1894 to seize the lands of thousands of poor farmers in order to create the special economic zone in which Tata’s new factory will reside. In the Indian press, this action has been portrayed as part of an overall battle between the small number of India’s billionaire industrialists and teeming masses of hardscrabble farmers.

Protests by the farmers and their supporters have turned violent as the police have tried to tamp down the unrest quickly, and the resulting injuries have further polarized opinion in India. The farmers say the seized land is the most fertile and productive in all of India. The government strongly denies this, and points to the fact that the compensation packages offered to the displaced farmers are the most generous in the country, as well as their statement that the majority of the 14,000 farmers affected have already accepted the buyouts.

A targeted area of 1800 acres has already been identified in West Bengal, and is being fenced off now. The communist (yes, you read that correctly) West Bengal regional government is eager to show that their government is investor-friendly, and considers the Tata project extremely important. The federal government has been diligently putting out the same message regarding investment, and now has over 250 applications for similar special economic zones throughout India. The zones call for large gated areas which include a middle-class housing development within, which is also exacerbating the class tensions. The federal government’s response to this criticism at this point is basically, “Get used to it. This is the New India, and it will benefit all of us”.

Meanwhile, another public relations front is opening up from the environmental side. Environmental groups are saying that once people go to cars, there will be no going back, and the astounding congestion in India’s cities will get much worse with a corresponding increase in pollution. As an example, they point out that 60% of the residents of New Delhi use public transportation to get around, but with cheap cars available to the masses, that number may fall off considerably, paralyzing traffic even more in the city, and pumping out untold levels of air pollution. And this is probably only the beginning of this problem since all of the other auto companies in India (Ford, Renault-Nissan, GM, etc.) plan to follow Tata’s lead and produce a bare-bones car of their own.

Tata’s public response to both of these concerns has been, for the most part, no response at all. They are letting the federal government and the various regional governments act as their proxy in these public relations battles, saying little and pushing forward as fast as they can with their plans. Like almost everything else controversial that happens in India, they are keenly aware that once it looks inevitable that they will get what they want, then the furor will just disappear and their various opponents will just recede into the background.

COPYRIGHT Autosavant.net – All Rights Reserved.

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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2 Comments

  1. Millions more cars get put on the roads in India and the same is happening in China. What are the humans gonna breathe?

  2. This is nothing new. In fact, it hardly qualifies as news in India, because the regular Indian is always getting taken advantage of by large companies working in league with the government. The average Indian citizen has very few rights. The rich Indians have power and privilege and they use it constantly.

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