Tata's road to other people's ruin

Tata's road to other people's ruin

10th January 2008

India's most aggressive transnational minerals' company, Tata, is about to market what it calls the "People's Car" at a price of around one lakh (100,000) rupees or US$ 2,600 (sic).

Belatedly, concerns at the environmental impacts of hundreds of thousands of this cheap polluting vehicle hitting India's already crammed, chaotic and choking roads, are being registered in the country.

R.K. Pachauri, chairman of the joint 2007 Nobel Prize-winning Intergovernmental Panel on Climate Change, says the concept of a one-lakh car bringing motoring to a mass market in India is giving him "nightmares".

What's still ignored, however, are the more hidden social costs already involved in this joint venture between Tata's and Italy's Fiat. These include the bloody attacks on farmers defending their prime agricultural land at Singur (the Special Economic Zone allocated for the car factory) in 2006.

There are also the consequences for thousands of poorer people in areas targeted by Tata for the iron ore and steel-making facilities needed (at least in part) to feed the car making plant. The past two-year reign of terror, visited on villagers and Indigenous communities in eastern India, started when Tata tried to establish a steel factory at Kalingangar, Orissa in January 2006.

[see: <http://www.minesandcommunities.org/Action/press1803.htm>]

Nor that Tata's recent acquisition of a huge iron ore deposit on the World Heritage site of Mount Nimba, in Ivory Coast, West Africa, is part of the company's avowed expanionist policy.

[see: <http://www.minesandcommunities.org/Action/press1763.htm]

Last week too, the Indian government announced that it had relaxed a former ban on Bangladeshi investment in the country, thus paving the way for Tata to revive its stalled US$ 3 billion proposal to construct steel, power and fertiser plants in its eastern neighbour.

Ratan Tata, chairman of the eponymous Indian conglomerate, recounts that "what drove me [to develop the 'People's Car'] was a man on a two-wheeler with a child standing in front, his wife sitting behind, add[ing] to that the wet roads - a family in potential danger."

Those poor families already sacrificed to Tata's designs - and endangered by its future plans - might have a different view on what constitutes real danger in today's India

Green activists concerned over People's Car

By Jo Johnson in New Delhi

Financial Times

9th January 2008

Ratan Tata, chairman of India's sprawling Tata Group, on Thursday will pull the covers off a car that is dividing his country. The "People's Car", expected to sell for as little as $2,600 when it reaches showrooms in September, is stirring nationalistic pride in India's business community - but it is also causing environmentalists sleepless nights.

Meanwhile, for a government determined to kickstart slow-moving industrialisation and generate sorely-needed jobs for surplus rural labour, the People's Car has taken on a broader significance, symbolising India's determination not to cede the mantle of manufacturing excellence to China.

Manmohan Singh, India's prime minister, last year launched a national "automotive mission plan" to make the country the global destination of choice for the design and production of cars and car parts. The plan targets annual sector sales of $145bn (£73bn) and the creation of 25m jobs in India by 2016.

Car culture is already alive and well in India. More than 1,200 exhibitors have taken space at the week-long Delhi car show, which opens with Thursday's unveiling of the People's Car. Indian industrialists say that if they do not tap the new middle-class market - set to expand from 50m today to 583m in 2025, according to McKinsey - then their Chinese and western rivals will. Roland Berger, the consulting firm, estimates that by 2010 an additional 30m households will be able to buy a car.

Safety, comfort and discretion

Puneet Kalra has never seen it or driven it, and he recently bought a new motorcycle. But the 22-year-old Delhi commuter says he "definitely" plans to buy a "one-lakh" car, writes Amy Yee in New Delhi.

Tata's one-lakh - or Rs100,000 - car is set to shake up the Indian market and offer car ownership to a new stratum of society in one of the fastest growing economies.

Just how close its real price will be to Rs100,000 remains to be seen. But the price is still expected to be far less than that of entry-level cars from the leading carmakers Maruti, Suzuki and Hyundai, which typically start at about Rs200,000.

More than 8.4m two-wheelers, including motorcycles, scooters and mopeds, were rolled out in India last year compared with 1.5m passenger vehicles and Tata is hoping the affordability of its new car will spur motorcycle owners to upgrade.

For Mr Kalra, there are several incentives to spend a little bit more than the Rs70,000 he paid for his motorcycle last year.

He finds his 40-minute commute across Delhi unpleasant in winter, when the temperature sinks to near freezing at night. He also covets the extra safety a car could bring to his daily venture into Delhi's chaotic traffic.

Financing the new car should not be a problem, he says, as "Rs100,000 is not a huge amount", which the bank will easily lend. And, of course, "you can go anywhere easily with your girlfriend in a car", Mr Kalra says. On a motorcycle, "everyone can see you".

"Everyone has a car nowadays, so you feel bad arriving by bike," says Sandeep Chauhan,a marketing executive, as he tries to balance his briefcase on the handlebars of his motorbike. "A car says you are in a good position, a good career."

Since it was announced in 2003, the idea of Tata's super-cheap car, a rear engine four-seater, has captured the imagination of the automotive world. Rivals will be keen to see how an Indian truckmaker that only moved into carmaking in the 1990s has managed to reconcile a tiny price tag with tightening safety and emissions standards.

With nearly all new small cars selling in India for Rs200,000-Rs400,000, the Tata "one-lakh car" will add a new layer at the bottom of the consumer pyramid. At about Rs100,000 ($2,600, ?1,700, £1,300) - known as a lakh - the lightweight vehicle will cost half as much as a Maruti 800, the cheapest car now available, and little more than a high-end motorbike.

Tata has huge ambitions for the one-lakh car. The company's purpose-built plant in West Bengal has a capacity of 250,000, equivalent to a quarter of the country's 1.1m domestic passenger vehicle sales last year.

Environmentalists, however, fear that already clogged roads and polluted cities will soon be overwhelmed by millions of learner drivers, especially as other Indian industrialists now have plans for low-priced cars. Bajaj Auto, best known as a maker of motorbikes and three-wheelers, on Tuesday confirmed plans for its own small car, expected to be priced at Rs120,000, in a tie-up with France's Renault.

Climate change expert R.K. Pachauri, chairman of the joint Nobel Prize-winning Intergovernmental Panel on Climate Change, recently said the idea of the one-lakh car bringing motoring to a genuinely mass market in India was giving him "nightmares".

Environmentalists warn that with Indian emission norms still lagging several years behind those of the European Union and pollution levels at critical levels in many of the larger cities, the race to produce a super-cheap car is likely to impose massive costs on society that are not adequately reflected in dealers' prices.

"While the automobile industry prospers, much of urban and suburban India is getting more polluted," Delhi's Centre for Science and the Environment reports in Down to Earth, its newsletter.

Official figures show that particulates have reached "critical" levels in more than half of 90 cities monitored by pollution control authorities.

Mr Tata argues that the one-lakh car, which the Cornell-trained architect helped design, will be no more polluting than a motorcycle. "As we're not going to produce millions and millions of them, inundating the country, we will not be adding to the carbon footprint on a per passenger basis," he told the Financial Times.

He also says the sight of whole families crouched on motorbikes, which account for 80 per cent of domestic vehicles, persuaded him of the need for the car.

"That's what drove me - a man on a two-wheeler with a child standing in front, his wife sitting behind, add to that the wet roads - a family in potential danger," he wrote on the company's website.

Safety campaigners counter that flooding the country's overloaded road infrastructure with more vehicles will only worsen the problem, particularly for pedestrians, who represent a large proportion of those killed in road accidents.

Copyright The Financial Times Limited

Zeal, and Worry, Greet India's New "People's Car"

PlanetArk INDIA

9th January 2008

NEW DELHI - India's "People's Car" has yet to be unveiled and the advertising campaign has not even begun, but some Indians are already raving about Tata Motor's new US$2,500 car -- despite the fears of environmentalists.

"I am really excited and definitely buying the cheapest car in the world as soon as they launch it," said Arindam Sapui, a rice trader in Burdwan, a small town in West Bengal in eastern India. This is exactly the kind of unbridled enthusiasm that environmentalists have been dreading as they predict a plague of ever-cheaper cars and ever-swelling clouds of climate-changing fumes.

Tata will unveil its 100,000 rupee car on Thursday. Selling for less than half price of the current cheapest car in the market, it hopes it will tap into the growing ranks of India's middle class -- rather like the Volkswagen Beetle did in Germany or the Mini in England.

Sapui currently zips between villages for work on a scooter, and was thinking about upgrading to a more powerful motorbike. "But my wife said the 1-lakh car would be cheaper and much safer," he said, using the word for 100,000 in the Indian counting system. Several more-established middle class consumers who already owned one car also said it would make for an affordable second car for a spouse, son or daughter.

COMMUTER WORRIES

But environmentalists may be relieved that some people interviewed in New Delhi and Mumbai were more muted.

Some echoed fears that car sales will rocket as more people become able to afford them. They were not thinking of gas emissions so much as the horror of the commute to the office in cities where roads are jammed and public transport is miserable.

"I don't think the car should be launched at all," said Kishan Aswani, 75, who commutes for an hour each weekday to his south Mumbai office.

"There is already a lot of traffic on the roads. Travelling by train is impossible, you simply cannot get in or move out."

Tata Motors says a lot of these fears are unfounded. It says the car will meet emission standards and that car sales are already growing fast without the help of the People's Car.

"Given the rate at which the entire industry will grow, even if we market it very heavily, it will still be a miniscule percentage of the cars entering the roads," a company spokesman said.

He added that although the company is targeting first-time buyers, it was also expecting a large portion of sales to come from people trading in their old car as well as from people already considering buying a second-hand car.

WIDESPREAD POVERTY

Widespread poverty is another limiting factor.

For people like Anil, a 22-year-old rickshaw driver in Delhi, even the world's cheapest car still seems ludicrously expensive.

"No money," he said, rubbing his fingers and pouting. He earns almost exactly the national average income, and so the People's Car amounts to more than three years' earnings.

Likewise, Rakesh Kumar, a taxi driver, pointed out that only scooters and motorbikes could fit down the tight alleys that thread through the slums where he and tens of millions of other urban Indians live.

But as millions more people join the estimated 50 million strong middle class in the coming years, cars remain an important marker of status.

"It's the same dream anywhere in the world," said Jyoti Anand, a used-car salesman in Delhi. "You want a good home, a good car, and a beautiful wife."

Baliram Thakur, a taxi driver, was also thinking of his wife when he said he planned to make a booking right away. Then someone told him the cheapest model came without air-conditioning, and his resolve wavered.

"No AC?" he said, taken aback. "The wife will get hot, and she won't like that." (Additional reporting by Bappa Majumdar in Kolkata and Swati Pandey in Mumbai; Editing by Alistair Scrutton and Alex Richardson)

Story by Jonathan Allen

REUTERS NEWS SERVICE

Lifting Of Ban On Bangladesh Investment In India

Delhi expects Dhaka's nod for $3b Tata plans

Pallab Bhattacharya, New Delhi, The Daily Star (Bangladesh)

8th January 2007

The lifting of the ban on Bangladeshi investment in India should pave the way for Tata's three billion dollar investment proposal in Bangladesh's steel, power and fertilizer sectors, India Commerce Ministry Officials said yesterday.

They said the investment proposal from Tata, one of India's biggest conglomerates, had been hanging fire for three years possibly because of India's ban on foreign direct investment from Bangladesh.

But now that the government has issued a notification withdrawing the ban, the expectation is here that Tata's mega project will receive a green signal from Dhaka, the officials said.

Bangladesh had contended that the ban on FDI was unfair, especially when Indian firms had been asking to invest in Bangladesh.

Union Minister of State for Commerce Jairam Ramesh is on record as saying that India cannot possibly hope that its companies' investment would be allowed in any country if there remains a ban on investment from that country in India.

Indian commerce ministry officials point out how the lifting of the ban on investment from Sri Lanka has helped Indian companies' in putting their money in the island nation.

They said the decision to withdraw the ban on FDI from Bangladesh was taken at the highest level of Indian government.

Meanwhile, Ramesh, during an interaction with journalists of "The Hindu" newspaper in Chennai, said, "It is unfortunate that we have not been able to develop our relationship to the level of making it (Bangladesh) our gateway to South East Asia".

For this reason, India's decision to rebuild the Sitwe port in Myanmar at a cost of 120 million dollars on Build-Transfer-Use basis assumes significance as it will help provide trade connectivity for north eastern Indian states and provide an alternative route to link with South East Asia without transiting through Bangladesh, he said.

Tatas in race for Chiria iron ore

Alok Sharma, Indian Express

6th January 2008

Jamshedpur, Jan 5 The tug of war for the famous Chiria iron ore mines is all set to intensify with domestic steel giant Tata on Saturday, indicating that it was open to secure raw-material from the same mines. Currently state-owned steel company Steel Authority of India Ltd (Sail)and Jharkhand are locked in a legal battle on Chiria.

“We have asked the Jharkhand government for proven reserves of high grade iron ore needed for the expansion of steel plant in the state. The 5 mt steel plant will be upgraded to 7 mt by June 2008 and 10 mt by 2010. Total investment on the expansion will be in the tune of Rs 22,000 crore,” managing director Tata Steel Ltd B Muthurman said.

When asked if Tata Steel has applied for iron ore mines in Chiria, he said, “We have applied for iron ore leases in Jharkhand, now it is up to the government to provide the same.” The company is looking at assured allocation of over than 1 billion tonne of iron ore for its green field and brown field expansion in the state.

The company will also begin construction work for its 6 million tonne plant at Kalinganagar (Orissa) within the next 3 months and the plant will be commissioned by 2010, at an investment of about Rs 22,000 crore.

Tata Steel has also started construction work for new colour-coated galvanised steel production plant in its special economic zone (SEZ)at Gopalpur in Orissa within 24 months and will shell out over Rs 250 crore.