Some companies seek to fill market niches, but the Tata Group is increasingly known for filling market chasms.  Tata boldly transformed the international auto industry late last year when it announced its intention to release the 115,000 rupee (US$2,500) Nano, potentially bringing car ownership within reach of millions of Indians in the coming years. Now Tata has introduced an even more ambitious project that could drastically change the Indian landscape and much of the rest of the developing world in the next decade: the 390,00 rupee (US$8,500) home. Dubbed “Nano Homes,” Tata is building one thousand 283 square-foot houses outside of Mumbai. Apparently they are not alone, according to The Globe and the Mail:

Matheran Realty, another real estate giant, plans to build 15,000 flats in the next three years in Matheran, outside Mumbai, available for about 220,000 rupees. India’s Godrej group, meanwhile, plans to build a low-cost township outside the western city of Ahmedabad, with apartments ranging from 500,000 rupees to two million rupees.

With at least 23 million urban Indian families in the middle- and lower-middle-income groups aspiring to escape slums and live in decent, affordable housing, it’s not hard see the logical conclusion of this business venture: millions of Indian families moving to the outskirts of Mumbai, Delhi, and Bangalore to take advantage of cheap and available land and the promise of a better life. According to the Mumbai-based research firm Monitor India, we could be talking about as many as 180 million Indian families, if you include rural households. If we extrapolate this to the rest of the developing world, we could be seeing a global trend towards suburbanization in the not-too-distant future.

Tata’s “Nano House” could raise the standard of living for millions of the world’s poor by pulling them out of squalid slum conditions, but like the “Nano Car,” it could drastically exacerbate mobility and pollution problems already facing dozens of cities in the developing world. That’s because cheap housing nearly always necessitates large tracts of cheap land on the outskirts of cities where developers can take advantage of the economies of scale that come with developing many houses at once. Is it any surprise that Tata and its competitors are all operating on the urban fringe?

Without an aggressive program of well thought-out dense development, integrated mass transit, and car-use demand management, the combination of cheap cars and cheap homes could create for India the same intractable land-use conditions found in every major metropolitan region in the United States since the end of World War II: ubiquitous sprawl, gridlock, loss of agricultural lands, and unheeded habitat destruction.