The announcement in January by Tata Motors of its newest car, the Nano, was revealing on many levels. The announcement generated extensive coverage and commentary, but just about everyone missed the Nano's real significance, which goes far beyond the car itself.

But, OK, let's start with the car itself - particularly the price. At about $2,500 retail, the Nano is the most inexpensive car in the world. Its closest competitor, the Maruti 800, made in India by Maruti Udyog, sells for roughly twice as much. To put this in perspective, the price of the entire Nano car is roughly equivalent to the price of a DVD player option in a luxury Western car. The low price point has left other auto companies scrambling to catch up.

Thinking outside the patent box

How could Tata Motors make a car so inexpensively? It started by looking at everything from scratch, applying what some analysts have described as 'Gandhian engineering' principles - deep frugality with a willingness to challenge conventional wisdom. A lot of features that Western consumers take for granted - air conditioning, power brakes, radios, etc - are missing from the entry-level model.

More fundamentally, the engineers worked to do more with less. The car is smaller in overall dimensions than the Maruti, but it offers about 20 per cent more seating capacity as a result of design choices such as putting the wheels at the extreme edges of the car.