An innovative  car from India that costs just $2,500 is now the  star of a museum exhibition at an Ivy League school.

It most countries, you may be excused from thinking this a crazy notion. And it wouldn’t generally work unless there’s something special on offer. Which in this case is a zippy car, built on a very tight budget, and which emits a much smaller percentage of carbon dioxide than the average city car.

That’s right, the car is question is Tata Motors Nano. Billed as the modern, contemporary emission-friendly city car, the first piece was delivered into the commercial capital of India, Mumbai, amidst much enthusiasm. It has received the Frost & Sullivan 2009 Innovation Award for outstanding innovation and exceptional contribution to the auto industry.

And now, it receives another honor – that of playing center stage at the Herbert F Johnson Museum of Art’s 2011 exhibition highlighting societal change. The car is featured alongside a hanging exhibition of the Nano dismantled and its parts suspended. To further illustrate how environmentally friendly the Nano really is, a 25-foot diameter balloon will float in the museum gardens; a depiction of the Nano’s entire emissions for a year. Cost efficiencies must go hand in hand with sustainable living. Tata’s Nano is indeed a combination of the above, and a reminder that it is possible to be trendy and practical while saving the world.

Tata’s Nano was conceived of in 2006 as a  solution to meet the needs of the common man and the rural worker. Its  all-aluminum, two cylinder engine delivers 54 miles per gallon and despite its size (10 feet by 5 feet),  meets  current regulatory requirements.

There is a market for any product at any price in India. Most stories in the West have focused on the Tata Nano, the lowest cost car in the world, and while other low cost cars such as the Suzuki’s Maruti line, entries from Hyundai, Renault, and even GM/Ford are lining up for the the low end.

Affluent Indians have long lusted for the Mercedes Benz and Rolls Royce name plates. In fact there Mercedes recently invested $50 million into upgrading its India sales network, according to India Managing Director Wilfried Aubur. I first heard of the  Maybach when Airtel billionaire Sunil Mittal was reported to have bought one in India. Today Land Rovers are available in India. So BMW’s presence in India should be no surprise.

BMW 523i

BMW is a late entrant to the India market. The 523i, 530d and 525d will be produced as completely-knocked-down units at BMW’s Chennai facility in South India and priced from $80,000 to $120,000. Chennai is home to several auto factories including Leyland and Hyundai.

If you want to sell your company’s product to India, don’t prematurely dismiss the market as too complex, too poor, too small or too anything. Your competition may surprise you with a successful entry, if you do.

I write for Business Week from time to time and this week, Dr. Atul Goel and I wrote a piece entitled: Innovation from India, the next Big Wave.  It took them some time to publish the piece, but in many ways it is even more relevant now than when we first wrote it, given the state of the global economy.

Click here to read about how Innovative companies the world over are discovering the research and development advantages to be found in India.