The people's car with a market of 1.8m

It may not meet Western standards, but with the arrival of the Tata Nano, India's motor industry has come of age. By Richard Orange in Delhi
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The Independent Online

Girish Wagh blinks and recoils slightly as he is guided by a smiling PR man back to his chair to face the heaving, bellowing mass of the Indian press.

The man who led the design of the world's cheapest car, the Tata Nano, is obviously not used to the spotlight. But today he is getting the kind of attention India usually lavishes on its Bollywood film stars.

Ratan Tata may have dreamt up India's first people's car, but it was Wagh and his team of 500 engineers who made it happen. As he leaves the conference, he is followed by a stampede of journalists so unruly that burly bodyguards are called in to rescue him.

The Tata Nano's launch on Thursday marked the day that India's skills in "frugal engineering" – once represented by clunky, garishly painted Tata trucks, antiquated Ambassador taxi cabs and Mahindra jeeps – finally came of age.

Mr Wagh and his team have designed a car at a fraction of the cost of anything the best minds in Japan, Detroit, Korea and China have achieved. The Rs100,000 (£1,300) price is about half that of both the Maruti 800, the cheapest car on Indian roads, and the Chery QQ, China's cheapest model.

Nobody really believed they could do it. And when Mr Tata confirmed on Thursday morning that "a promise is a promise" and the Tata Nano would indeed be on sale for "one lakh only, VAT and transport being extra", a gasp went up from the 1000-strong audience.

For the first time, a car has been placed in the same price bracket as a flat-screen TV, a London commuter's season ticket, or an upmarket mountain bike. Time will tell whether it will become an icon like previous "people's cars", the Volkswagen Beetle, the Citroë* 2CV and the Mini. But with its bulbous front bonnet, hooped roof arch and small tubeless wheels, it has enough character to be in with a chance.

Indeed, the Nano is arguably the most significant new car launch in a quarter of a century. Even Mr Tata – a self-confessed shy man – was up front about the significance of his brainchild. Arriving on stage to the theme from 2001: A Space Odyssey (Richard Strauss's Also Sprach Zarathustra), he compared it to the Wright Brothers' first flight, the 1969 moon-landing and the world's first super-computer.

A better comparison, though, is the Model T Ford and the VW Beetle – cars that transformed the motor industry by bringing car ownership to a new class of people. Research from PricewaterhouseCoopers suggests that by halving the cost of India's entry-level vehicle, Tata could create 1.8 million new car buyers, doubling the size of the market.

The excitement in India was clear on Friday morning. Every motorcycle rider stopped in Delhi already knew the Nano's name, and was interested in buying one.

Satish Kumar, a 42-year-old father of two, said: "Indian people are very, very happy with this one lakh car. For my next car, I will buy this Tata. All the Indian villages and cities will buy this Tata. They will see that one motorcycle costs 70,000 rupees and takes two people, and a car costs one lakh and can take four."

Abishek Singh, 33, who was driving a TVS motorcycle, said: "Today I have a plan to go to the Auto Expo and have a look. I'm proud of Tata – they've committed to something and they've been true to their promise. Because he [Ratan Tata] is from India, I'm proud of him."

All the signs, then, are that there will be little spare capacity at the West Bengal factory where Tata will be operating from October this year. It is designed to produce 200,000 cars a year, and can be upgraded to produce 350,000.

So how did Tata do it? Ratan Tata said the company had not scrimped on quality to bring the cost down: "Many said this dream couldn't be achieved – some scoffed at what we would produce. Let me assure you that the car we have designed will meet all the safety requirements of a modern car, and have a lower pollution level than even a two-wheeler."

He added: "We shrunk the package of the car – we used less steel, we used less material, we had a smaller engine."

The car has been stripped of all unnecessary parts – there is just one side mirror, one windscreen wiper, and no air conditioning, power steering, airbag or central locking.

In fact, Tata's claim that it hasn't made cuts around emissions and safety is a stretch. The door panel in the standard model lacks a bar to protect drivers from a sideways collision, as Mr Tata admitted. The car would fail international tests even if airbags were fitted.

And its carbon emissions – at around 120g/km – are double what you would expect from a two-wheeler. Moreover, the car released this year will meet only India's emissions norms – which, according to Vivek Chattodadhya at Delhi's Centre for Science and Technology, are 10 years behind Europe's.

The view from the streets of south Delhi, however, is that none of this matters. "This is a very nice and comfortable vehicle," says Mr Kumar when the safety failings are raised. As for the lack of air conditioning, he pointed out that "India's cars are already 70 per cent not AC".

Ratan Tata is right to boast that the Nano is far safer than two-wheelers, which have double the fatality rate of cars. As for the potential increase in congestion and pollution, he asks: "Should the masses be denied the right to have an individual form of transport?"

The launch of the Model T Ford and VW Beetle did more than change the industry; they turned their creators into global automotive giants. Ford, Volkswagon and Renault, along with India's Bajaj, will all now follow with their own ultra-budget cars.

But the Nano puts Tata years ahead. It also proves that – for a certain type of low-cost engineering, at least – Indian manufacturers can outdo anyone else in the world.

Tata is filing for 34 new patents on the back of the Nano. The best example is its 623cc rear-mounted engine. Made of lightweight aluminium, it is the first two-cylinder engine with a single balance shaft to be used in a car. It relies on a fuel injection system designed by Germany's Bosch to eliminate the "pfut-pfut" of normal two-cylinder engines. Its small size and positioning free up space in the car, keeping weight to a minimum and making it possible to reach a speed of 65mph despite the engine's tiny 33bhp.

Dr Arun Jaura, head of product development at Tata's rival Mahindra, argues that India's engineers think innovatively because they cut their teeth when the country was an impoverished and closed economy in the 1980s and early 1990s. "Indian engineers didn't have billions of dollars at their disposal," he says. "If you have so many resources, you tend to be laid back and not think differently. Indians do think very differently; it's our backbone and our DNA."

And many Indian automotive engineers, Dr Jaura included, had successful careers in Detroit before they were lured home.

Indian car manufacturers may have roared into the consciousness of consumers in the US and UK with the launch of the Nano. But we are set to hear more from them before the end of this year – and not just because of Tata's likely acquisition of the Land Rover and Jaguar brands.

Mahindra plans to launch its Mahindra Scorpio SUV in the UK in June at a bargain price of £13,000, and will enter the US next year. Tata has confirmed it is in talks with distributors about launching its new-look Indica in the UK at the end of this year, with the Nano perhaps following in about three years' time.

Just as Girish Wagh on Thursday emerged blinking after 30 months buried in Tata's development centres, so it may be time for India's car companies to come out on the world stage.