Others suggested that he not convinced about Ratan Tata's dream of a Rs 1 lakh car.  Today, Sumantran has set up a consultancy (Sumantran Consulting) which advises top Indian and global automotive companies.

He is also a member of the Science Advisory Council of the prime minister and is a scientific consultant to the government of India for manufacturing technology. 

Sumantran spoke to S Kalyana Ramanathan on the sidelines of CII Connect 2007 in Chennai about the challenges facing the automotive industry and ultra low-cost cars.

Your lack of conviction about the Rs 1 lakh car has been mentioned as a reason for your exit from Tata Motors. Is this true?

No, that's not true. I was and am still optimistic about the Rs 1 lakh car. This is not something just related to Tata Motors or India. There is a worldwide interest in low-cost cars.

General Motors CEO Rick Wagoner and Nissan-Renault's Carlos Goshn have spoken about developing a low-cost car. Even the Volkswagen CEO recently spoke about developing a Euro 6000 car, when there are no VW models available today for less than Euro 12,000.

The Logan has been successful even in markets like Western Europe. Therefore, I think it is a worldwide phenomenon.  

What is the demand for such cheap cars?

There is clearly a tendency towards bifurcation. Cars are not just about status, they are also about mobility.

Even those who can afford an expensive car may prefer to buy a cheaper car and spend the extra money on a good vacation. 

Take a look at those attending this conference (CII Connect 2007). Half of them carry a Mont Blanc pen, while many would carry a use-and-throw-away pen like the one I am using.

Even a surging economy like China, where VW and Audi have done well, is moving towards smaller cars... 

China has seen a middle-down approach, starting with expensive sedans and moving to compacts. In India, it has been a bottom-up approach. You will find a correlation to the pattern of purchase. In India, 80 per cent of the vehicles are financed by banks, while in China this accounts for only 30 per cent.

You had spoken about the lack of R&D investment leading to lower Intellectual Property Rights ownership as a possible problem for India's automotive outsourcing space. Is that something that can be corrected now?

I still think the opportunity for component exports from India is phenomenal. So far the investment in developing Intellectual Property Rights has been huge.

But I don't see how else it could have been done. We had to reach a critical size to attract investments in large R&D efforts.

Today, there is not a single major city in India that is not congested. Even with a penetration of only 7 vehicles per 1,000 people, infrastructure in major cities has been pushed to the limits. How do we balance growth in the automobile industry (that supports overall economic growth) and keep cities free off congestion?

There is a very strong linkage between GDP growth and personal mobility. You cannot expect to achieve economic growth by curtailing mobility. The key is to develop the public transport system. China, for example, resembles the US a lot in terms of a mega metropolis, while India is more like Japan, where there is a space constraint.  Look how the two-wheeler industry has boomed in India despite the presence of a railway network (metro). The focus must be on developing a good public transport network (that can decongest the roads).