The Tata Nano can be considered a radical innovation because it offered a new and disruptive solution to the problem of providing affordable transportation to millions of people in India and other developing countries. By dramatically reducing the cost of a car, the Nano created a new market segment and expanded the pool of potential car buyers. However, from a technological perspective, the Nano can be seen as an incremental innovation because it did not introduce any fundamentally new technologies but rather combined existing technologies in a novel way to achieve a new level of affordability.
The Nano can be seen as competence-enhancing from the perspective of Tata Motors, which demonstrated its ability to innovate and create a new market opportunity. However, it may be competence-destroying from the perspective of other car makers who were not able to match the Nano's price point and had to compete against a new rival in a previously untapped market segment.
The Nano can be considered a component innovation because it involved incremental improvements to existing technologies, rather than a radical reconfiguration of the underlying design or architecture of the car. The focus of the innovation was on reducing the cost and weight of the car by simplifying and optimizing its components and subsystems.