With global auto majors showcasing 10 new models, including three for the first time ever in the world, India’s Auto Expo has come of age. With the Indian car market growing around two-and-a-half times and exports rising over nine times in the decade — as a proportion of domestic production, exports are now up to 13 per cent from 3.5 per cent in 2000 — this was bound to happen. After the Chinese market, which overtook the US one in terms of the number of cars sold in 2009, the Indian market has exhibited one of the highest growth rates. The question is whether these launches of new cars presage India’s arrival on the global stage, as a small-car hub for instance — selling global cars in India and developing new cars from scratch here are two entirely different things. Certainly, the ingredients are there. Suzuki’s Indian operations sell more cars than Suzuki does in Japan and contributes around 30 per cent to the parent’s bottom line (this year it is 80 per cent!). And while Maruti’s R&D abilities allowed it to redesign the Zen on its own in 2003, its engineers were part of the core team that designed the Swift and the SX4. India’s auto components industry has as many as 21 Deming prize winners and 153 others who have won the prestigious TPM Excellence award from the Japan Institute of Plant Maintenance, and defects here are down to below 50 parts per million, which is truly global quality.
To achieve a global status, however, requires India to dramatically up its game in terms of R&D and design capability. Once again, Suzuki made the first move by investing in an R&D centre here (a fourth of Suzuki’s global R&D engineers are in India); Tata Motors’ Nano was the first to file for patents on its work and, as the court battle between TVS and Bajaj Auto showed, the twin-spark carburettor was another Indian innovation. All this needs to be hiked dramatically. While foreign players like Suzuki and Hyundai, and several others more recently, have driven this growth process over the past decade, the ongoing boom is driven equally by the emergence of Indian companies like Tata and Mahindra as global players. By investing all along the value chain, the Tatas, Mahindras and other domestic auto companies have enabled the growth of a wide range of subsidiary industries. The decision of the Tatas to buy into global brands like Jaguar has also created the framework for further penetration of global markets.
What is heartening about the auto industry take-off is that it is not merely a quantitative growth but also a qualitative one. India’s automobile industry, including the two- and three-wheeler sector, is producing more fuel-efficient, cheaper and better vehicles. Here China has taken the lead by investing more in the development of energy efficient vehicles. However, with supportive government policy, public pressure and global demand, India too can catch up on this front, offering more fuel-efficient vehicles. Estimated at Rs 35,000 crore, the export market has become a major factor driving the auto boom in India. Better port handling facilities and last-mile connectivity between manufacturing hubs and ports can only further boost auto exports to growing markets in Africa, Asia and Europe. India is better placed to exploit the emerging auto markets than China, which has the advantage as of now of superior and more efficient infrastructure for export. If India gets the equation right, the auto industry could well be the next engine of growth, much as it has been globally, and could provide the much needed boost to the country’s manufacturing sector.
