1 Lakh Car

Tata Motors Ltd., India's largest truckmaker, unveiled the country's cheapest car, pricing it at 100,000 rupees ($2,500) as it aims to convince the nation's 45 million motorcycle riders to trade up to four wheels.

Praise for Tata Motors' low-cost Nano car has been as much for its style and engineering as for its "world's cheapest" price tag, signalling India's intent to be more than just a cut-price manufacturer.

Analysts say India's reputation as a world-class information technology provider will help in that drive, but cost constraints and a growing shortage of skilled manpower may be roadblocks.

Tata unveiled the Nano on Thursday amid feverish media coverage, and said the curvy but compact car would carry a dealer's price of $2,500, affordable, it hopes, for millions of poorer customers in emerging markets.

"Tata reinvents the wheel," ran a banner headline on the front page of The Times of India daily on Friday.

India's engineering potential is "underestimated" by global auto firms, said consultancy KPMG, which says automotive services make up only a fifth of total engineering services revenue of $1.5 billion from global outsourcing.

"The auto industry competes for the same talent, but it is not as glamorous, and the pay is not as good," said Yezdi Nagporewalla, its national director for industrial markets.

Indian motorbike firms and components makers, whose exports are forecast to hit $20-$25 billion by 2015, have a longer history of developing innovative design and technology to be more competitive, said an analyst at consultancy Frost & Sullivan.

'Peoples car' to take over three years: Ratan Tata

In the process of finalising the concept of its peoples' car, Tata group chairman Ratan Tata today said it would take more than three years for them to produce their much-talked about Rs one lakh car. While auto leader Maruti is sceptical about the feasibility of such a vehicle, Tata feels his company's new car, aimed at at-tracting a two-wheeler customer, would be slightly bigger than the Maruti 800 and would meet all the safety standards required here.

To a question about the deadline, Ratan Tata said that "once all these things (concept of structure, material and power train— the building blocks) are in place, it will take toolings and a manufacturing plant, and so on. Usually, it is a three-year period." On whether this schedule could be crunched, he said "yeah. But I would say it is a three-year period from that."

Suzuki Motor Corporation, the majority holder in Maruti, had earlier said it may not be possible to produce a car in this price range but would be ready with a matcher in case their monopoly at the entry level car was threatened. On whether India was becoming a small car hub. Tata felt Maruti and Hyundai were manufacturing proven products in the country from processed know-how that has come from elsewhere.

Stating that the foreign companies were not taking people from India to their design offices, he said "it leads me to believe 'they have no plans to move in this direction." Tata said India could become a major centre for manufacturing only if it has one of the major engines designed fully here, and then follow it up and manufacture it "Unless that were to happen, you would only be doing engineering for some other location," he said.

The Tata group chairman had a word of praise for the Indian two-wheeler industry which, he said had achieved almost global scales because the business was on a global basis.

World's Cheapest Car