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Home > Business > Special

Green activists concerned over People's Car

Jo Johnson | January 11, 2008

Ratan Tata, chairman of India's sprawling Tata Group, on Thursday will pull the covers off a car that is dividing his country. The "People's Car", expected to sell for as little as $2,600 when it reaches showrooms in September, is stirring nationalistic pride in India's business community - but it is also causing environmentalists sleepless nights.

Meanwhile, for a government determined to kickstart slow-moving industrialisation and generate sorely-needed jobs for surplus rural labour, the People's Car has taken on a broader significance, symbolising India's determination not to cede the mantle of manufacturing excellence to China.

Manmohan Singh, India's prime minister, last year 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 annual sector sales of $145bn (euro 98bn, pound 73bn) and the creation of 25m jobs in India by 2016.

Car culture is already alive and well in India. More than 1,200 exhibitors have taken space at the week-long Delhi car show, which opens with Thursday's unveiling of the People's Car. Indian industrialists say that if they do not tap the new middle-class market - set to expand from 50m today to 583m in 2025, according to McKinsey - then their Chinese and western rivals will. Roland Berger, the consulting firm, estimates that by 2010 an additional 30m households will be able to buy a car.

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"Everyone has a car nowadays, so you feel bad arriving by bike," says Sandeep Chauhan,a marketing executive, as he tries to balance his briefcase on the handlebars of his motorbike. "A car says you are in a good position, a good career."

Since it was announced in 2003, the idea of Tata's super-cheap car, a rear engine four-seater, has captured the imagination of the automotive world. Rivals will be keen to see how an Indian truckmaker that only moved into carmaking in the 1990s has managed to reconcile a tiny price tag with tightening safety and emissions standards.

With nearly all new small cars selling in India for Rs200,000-Rs400,000, the Tata "one-lakh car" will add a new layer at the bottom of the consumer pyramid. At about Rs100,000 ($2,600, euro 1,700, pound 1,300) - known as a lakh - the lightweight vehicle will cost half as much as a Maruti [Get Quote] 800, the cheapest car now available, and little more than a high-end motorbike.

Tata has huge ambitions for the one-lakh car. The company's purpose-built plant in West Bengal has a capacity of 250,000, equivalent to a quarter of the country's 1.1m domestic passenger vehicle sales last year.

Environmentalists, however, fear that already clogged roads and polluted cities will soon be overwhelmed by millions of learner drivers, especially as other Indian industrialists now have plans for low-priced cars. Bajaj Auto [Get Quote], best known as a maker of motorbikes and three-wheelers, on Tuesday confirmed plans for its own small car, expected to be priced at Rs120,000, in a tie-up with France's Renault.

Climate change expert R.K. Pachauri, chairman of the joint Nobel Prize-winning Intergovernmental Panel on Climate Change, recently said the idea of the one-lakh car bringing motoring to a genuinely mass market in India was giving him "nightmares".

Environmentalists 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 dealers' prices.

"While the automobile industry prospers, much of urban and suburban India is getting more polluted," Delhi's Centre for Science and the Environment reports in Down to Earth, its newsletter.

Official figures show that particulates have reached "critical" levels in more than half of 90 cities monitored by pollution control authorities.

Mr Tata argues that the one-lakh car, which the Cornell-trained architect helped design, will be no more polluting than a motorcycle. "As we're not going to produce millions and millions of them, inundating the country, we will not be adding to the carbon footprint on a per passenger basis," he told the Financial Times.

He also says the sight of whole families crouched on motorbikes, which account for 80 per cent of domestic vehicles, persuaded him of the need for the car.

"That's what drove me - a man on a two-wheeler with a child standing in front, his wife sitting behind, add to that the wet roads - a family in potential danger," he wrote on the company's website.

Safety campaigners counter that flooding the country's overloaded road infrastructure with more vehicles will only worsen the problem, particularly for pedestrians, who represent a large proportion of those killed in road accidents.

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