With a population now at over 1.1 billion people and a fast growing economy, India has the potential to be a huge growth market for car-makers from traditional markets where growth has been stagnant in recent years. Indian company Tata Motors has announced plans to build a $2,500 car to appeal to middle income Indians and Nissan and Renault have responded with their own proposal for a cheap car. Even with India's low car ownership rate of 7-8 cars per 1,000 people (compared to 300-500 per 1,000 people in western markets) the huge population means that the streets of cities like Delhi and Mumbai are already incredibly crowded and pollution is growing.

Selling large numbers of low cost cars to tens or hundreds of millions of Indian drivers would not only amplify the traffic but also the emissions of carbon dioxide and other noxious pollutants. At the same time that developed countries are trying to cut their carbon emissions and pressuring rising economies like India and China to do the same. While car-makers are proposing these low-cost cars the government is trying to get buses and taxis to switch from gasoline to natural gas and also promote improvements in mass transit. Clearly it would be unfair to limit the potential for economic growth in other countries. However given the issues that have already been created in industrialized countries for the past century and a half we need to work with up-and-comers to find a better way forward.

[Source: Reuters]


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