It is a personal initiative of Ratan Tata, the group's Chairman, designed as a safe alternative for the Indian families crammed onto scooters. His off the cuff estimate for the car's price became a 'stretch target' for the product team[1].

To meet the target, the design team had to start from scratch. It was not only a case of removing unnecessary features (to the extent of providing only one wing mirror and three nuts per wheel) but the car was the product of a web of international supply chains. While the Nano is probably the most iconic of frugal products, it has not been the most successful. The challenges of rolling out the Tata Nano have revealed a lot about the importance of developing not just frugal products, but developing entire new ecosystems around them to help them thrive.

[1] http://www.management.wharton.upenn.edu/cappelli/documents/Cappelli_HBR.pdf

*Image courtesy of Krokodyl