In any developing country the automobile industry plays a major role in economic progress and India is no exception. Ever since the Japanese auto maker Suzuki, in partnership with the government, started making the small car Maruti about two decades ago, the automobile industry and the economy saw a phenomenal growth.

Now, with the Tata Motors launching Nano, the industry is poised to take another major leap. By pricing the basic model of the car at around Rs 1.40 lakh (on road), a good 40 per cent lower than the cheapest car in the country, Nano will not only create a new segment of buyers but will also make a dent in the entire small car market which accounts for 75 per cent of the industry. In short, it will create a price realignment from which most consumers will benefit.

The biggest beneficiary, of course, will be people from the middle income group who suddenly find that their dream to own a car can now come true. The affordable pricing of Nano can create a new revolution in private transportation. The other spin-off of Nano is that to make the car the Tatas will be making an investment of around Rs 2000 crore in the plant and the project is expected to create nearly 1500 jobs directly and indirectly.

Nano is also significant because it is, perhaps, the most important engineering innovation in the history of India.

The Tatas have shown the world that through a rigorous value engineering process India can develop low-cost products for mass consumption. Many industry stalwarts had expressed doubts about the feasibility of such a car. They will now have to go back to the drawing boards to find out where they can cut costs. It is almost certain that the largest car maker Maruti Suzuki, will either have to lower the price of their popular car Maruti 800 or face massive drop in sales.

By making Nano comply with the most contemporary emission norms, the Tatas have also silenced environmentalists who feared that the car will create a major pollution problem. The emission from Nano is claimed to be less than that from many bikes and autorickshaws running on petrol. Nevertheless, there is no disagreement on the issue that India needs better public transport to ease the traffic congestions on the road, lower pollution and shed oil import bills. Nano or others - adding more vehicles on the road should be discouraged in general.