September 2014
Diligent Opportunities
In his maiden speech at the Red Fort on Independence Day, Prime Minister Narendra Modi threw out significant and motivational bait to his audience, ‘Make in India, and sell anywhere in the world.’ It was his attempt to urge global investors to look at India as a manufacturing base as the country possesses skill, talent, discipline and determination. This is to some extent happening in the automotive industry, both in component and vehicle manufacture.
Many years ago Hyundai Motor Corporation made India its hub for small cars. Later, few other OEMs joined the club. Quite a few component manufacturers including Sundaram Fasteners and Metaldyne India had become a hub for certain types of components, supporting OEMs and global Tire-1s consistently. However, to make this happen on a large scale, as per the Premier’s intent, the learning and unlearning of several things are required. Starting from issues of allocating land, the country has several problems to be resolved including the availability of a talent pool, and norms relating to foreign direct investments. India has more than 1.2 billion people and with this kind of population there should not be shortage of talent. However, the auto industry is affected since talent is accessible only in select pockets, where land availability is bleak. In addition, archaic labour laws continue to be a strong deterrent for foreign companies to set up shop in India. Unless these issues are resolved, the country cannot leverage diligent opportunities and become a destination for overseas investments.
Of late, exports of cars from India to the European Union (EU) have begun to diminish; the reason given by the OEMs is that they have to focus more on the domestic market. However, there are some issues in exports to EU due to safety regulations. From November 1, 2011 all new cars and light commercial vehicle models in the EU had to be equipped with the anti-skid system Electronic Stability Programme (ESP). The corresponding EU regulation applies to all vehicles with type approvals issued after this date and, therefore, ESP will subsequently become compulsory in all new EU vehicles from October 31, 2014. While the drop may affect exports in the short term, it gives diligent opportunities for component manufacturers to get into manufacturing of parts or the full safety system.
The cover story of this issue is: Trade Pacts: Tread Carefully. Trade agreements help manoeuvre the run of the free market economy in desired directions and reach mutually beneficial targets without major mishaps. However, partners have be to chosen carefully considering the potential for mutual trade and economic co-operation. Unless economic factors form the basis for any decision on trade agreements, it cannot create a level playing field for both partners, which would not be diligent for opportunities in India.
Automotive Components Manufacturers Association (ACMA) of India is organising its 54th annual session & national conference in Delhi on 11th of this month, with the theme: “Capturing the Global Opportunity – The Next Imperative for Indian Auto Component Industry.” The next day, Society of Indian Automobile Manufacturers (SIAM) is organising its 54th annual convention to provide insights on Indian automotive industry’s linkages with overall development of the economy, besides, highlighting issues with regard to competitiveness, growth and its integration with the global economy. We do hope both events would develop into diligent opportunities for representatives of the automotive industry.
Hope you find this issue interesting. Looking forward to your feedback,
T Murrali
Editor
t.murrali@nextgenpublishing.net
