In March 2009, Tata Motors, the largest automobile manufacturing company in India, rolled out an inexpensive small car from its plant in Sanand town of Ahmedabad district of Gujarat. The car was metaphorically named Nano, which means dwarf in Greek and Little in Gujarati. The ambitious project of the Tata Group chairman Ratan Tata, is remembered for multiple reasons.
First, the plant to manufacture Nano was
planned to be set up in Singur town of Hooghly district of West Bengal. The
then Left Front government acquired the farm land for the project and handed it
over to Tata Motors. The then leader of opposition in West Bengal, Mamta
Banerjee organized a massive protest that turned violent against the project,
alleging that the land of farmers had been acquired inappropriately. Many
activists and celebrities supported Ms. Banerjee’s protests and Tata Motors was
finally forced to withdraw the project from the state of West Bengal. The then
Chief Minister of Gujarat, availed the opportunity and invited Tata Motors to
set up the plant in Sanand.
The event established Ms. Banerjee as champion
of farmers’ cause and helped her demolish the Left Front fortress in West
Bengal. The 35yr old Left Front regime ended in West Bengal in 2011 and since
then Ms. Banerjee is ruling supreme in the State.
The event also catalyzed the development of a
fourth major automotive manufacturing cluster in Sanand, after Chennai, Pune,
and Gurgaon in the country. This also cemented the position of the then Chief
Minister of Gujarat, Mr. Narendra Bhai Damodardas Modi, as champion of
industrial development and economic reforms. This image eventually catapulted
Mr. Modi to the center of Indian politics, making him the most popular
political leader and the prime minister in the country in 2014.
The Lakhtakiya car (Rs. One lac car), Nano,
however miserably failed to recreate the magic of the Maruti800, the first
“common man car” introduced in India in December 1983. Maruti800 remained the
best-selling car in India for over two decades. In fact its later variant
Maruti Alto is still one of the most popular cars in India. Nano could not last
even for one decade. Nano was put to rest in 2018, as Tata Motors decided to
cut the losses.
The day Nano was launched and declared a
revolution by the media, I intuitively knew that this product was destined to
fail. Tata Motors was trying to reinvent the Maruti800, without giving any
consideration to the evolution of Indian socio-economic character in the past 3
decades.
The Maruti800 was launched at a time when the Indian
middle class was starved of everything, especially quality. “Car” was still a
luxury. The economic setup was overwhelmingly socialist and the Maruti800 was
actually a public sector product – aimed to provide an affordable mobility
solution to the urban middle class population that depended mostly on public
transport or two wheelers for commuting.
Tata Nano, on the other hand, was launched at a
time when free market has taken so much deeper roots that even communists
agreed to acquire farm land to allow Tata Motor to set up a “Car” factory in
West Bengal. Tata Motors positioned Nano as an aspirational product to the
lower middle class people, emphasizing on Rs one lac cost as a primary selling
proposition. The company failed to realize that no aspiration lower middle
class family would want to spend Rs one lac, only to be ridiculed by neighbors
and relatives as owners of a “cheap” car.
In my view, Nano could have been a successful
product, if it was positioned as “convenience”. It could have done well, in my
view, if positioned as the second car for shopping in crowded markets, or commuting
to school and colleges, or even to be used as a replacement for auto rickshaw
etc. I therefore feel that Nano was more of a marketing disaster than an
engineering failure.
Applying this analogy to the recent two policy
disasters, i.e., Farm Laws and Armed Forces short term recruitment schemes. The
three farm laws were well intended and much desired reform measures that had to
be abandoned because the government did not market it well. Similar is the case
with Agnipath scheme that allows youth a short term (4yr) stint with armed
forces. I find that the government could have packaged the scheme better and
position it differently. Surprisingly, the Prime Minister Modi, who had
firsthand witnessed the Nano fiasco as the Chief Minister of Gujarat, did not
apply his learnings to these cases of policy disaster.
The template of NRC/CAA and farm law protests
is being used in the latest protests also. If the situation worsens further,
and the government is forced to withdraw the Agnipath scheme, before the
elections in Gujarat and Himachal Pradesh, scheduled to be held later this
year, it will set a dangerous precedent for future reform measures.
