Several domestic and global car manufacturers are considering making cheap, small cars for India, where a growing middle class is expected to snap up cars in the coming years. Anjana Pasricha has a report from New Delhi on what these small cars will mean for India.
Four years ago, Indian automobile manufacturer, Tata Motors, promised to produce a small People's Car priced at about two thousand five hundred dollars for the ordinary Indian. The company says the car will hit the roads next year.
The company wants to capture what could be a potentially huge market in a country where incomes are rising rapidly, but where cars are still out of reach for many people. Only eight in every 1000 Indians owns a car.
The Tata project has captured the attention of rival domestic and global automobile manufacturers seeking to ramp up sales in a huge, emerging market.
Several companies say they are also considering plans to make basic cars in the three thousand dollar range for the Indian market. Nissan Renault said recently it will "be part of the competition". The Indian Hero group, and Maruti Suzuki are among others firming up plans to make cars for the lower end of the market.
Pradeep Saxena, at research firm TNS Automotive, says these small cars could revolutionize Indian roads.
"It's clearly a hot topic today…. Clearly there is a huge potential which exists, and suddenly the market will expand. It will add an entirely new segment to the market," Saxena said. "There is no doubt about it. But I think the challenge lies in delivering a good product at that price."
Saxena says profit margins for these cars are likely to be thin, but manufacturers hope to make money by selling larger numbers of cars.
The car could fulfill the aspirations of people like J.P. Joshi, an assistant officer in the federal government's Revenue Department in New Delhi. He drives a motorcycle because he is unable to fork out the 48 hundred dollars for the cheapest car currently available in India. Forty-six-year-old Joshi has an overwhelming desire to own a car.
He says he is waiting impatiently for the (low-price) car to enter the market and wants to be the first to book it. He says the car will be within his budget and he will not have to borrow money.
Small cars accounted for nearly two-thirds of the one million cars sold in India last year.
But while the small, low-priced cars may fulfill the dreams of many ordinary people, urban planners and environmentalists are alarmed at what the explosion of vehicles could mean for India. They say roads already clogged with motorbikes and three-wheel motor rickshaws could turn into a nightmare. And the new vehicles could push up carbon dioxide emissions in a country where air pollution is a major concern.