Tata Nano car frugal or not?

In this column the Tata Nano car will be discussed. Is it a frugal innovation and is it contributing to inclusive development? These questions will be answered.


Few people come with brilliant ideas that change the world. Einstein discovered that time is relative. Newton discovered the basic laws of physics. These discoveries changed the world. Some innovation are not science related but also changed the world bigtime. The car, for example changed the way we transport and the TV created a whole new market. There are new kind of innovations that take place in especially poor countries. These innovations are called frugal innovations. Frugal innovations are innovations that reduce the complexity and cost. These product are for people that have to live from less than $2 a day. You have two kinds of frugal innovation. On the one hand you have frugal innovations where one existing technical product or service that is stripped from its luxury attributes but the basic technical functionalities remain intact in order to make sure it will be functioning. They can  reduce costs of a product between 50% to 97% .This sounds like frugal innovations are poor quality products, but they are not . On the other hand you have frugal innovations that are created or redesigned for potential customers.

In India you have for example a car that is the cheapest car in the world and is an alternative for the motor that a lot of people use in India. The Tata Nano car. This is a safer alternative to the motor bikes, because in India they ride with five people on a single motor bike. The car costs 100.000 rupees, $2000 at that time.  But is this an innovation that helps poor people? This car cannot be used in the EU because it has failed all the crash tests. So the question is, is this car really a safe alternative for the motor bike? The answer is no, the car cannot be used in the EU and the USA because of the big safety issues concerning the Tata Nano car. “The results were unequivocal. While the dummies were not quite beyond further use, the test centre reported that human passengers in the front seats would not have survived the crash. The vehicle was also given a zero-star rating for child protection, since it was not possible to install child seats in the car”. So this is not a car that really helps the poor people because it is just too unsafe to use. Is this Tata Nano car inclusive? Inclusive means that everyone enjoys the benefits of it and that the disadvantages facing the poor will be reduced. This car is built in India so it is creating job opportunities for poor people, therefore the Tata Nano car is contributing to inclusive development.  But there is no information about the standards which the workers work in. So are they working in normal standards, do they have a break, how long is a working day, all these aspects should be fine, otherwise it is not contributing to inclusive development. This car is not a big success because of the security issues but also for another reason. This car has a “cheap car” image and that does not appeal to lower income consumers in search of good-quality products. They should not have given the “cheap” part so much attention, because now they have an image problem. For the above reasons the Tata Nano car is not a good frugal innovation.

So to wrap it up, frugal innovations are innovations where the target group is people that earn less than $2 a day. These frugal innovation should not be unsafe, otherwise it will not be sold and it should not have a “cheap” image otherwise it will not be appealing to the target group.