Issue: Nov 2008


Indian gears up its auto industry



by Ed Richardson

The Government and the private sector in India are working together to ensure that the country moves to the front of the grid in the global auto industry race for dominance.

India turbo-charged its auto industry in 1991, with the opening of the sector by removing all investment constraints. As a result, most global OEMs now have facilities in the country and vehicle production is accelerating ever faster. In his annual report for 2006/2007, Automotive Component Manufacturers Association of India (Acma) president Raghu Mody, says Indian vehicle industry grew by 14% between 2006 and 2007. Passenger vehicles were up 18% and commercials 33%, with two-wheeler growth at 11% and tractors at 19%. The component industry recorded a 25% growth during the same period. Indian companies are continuing to put money into the industry, with investment expected to grow from US$1-billion to US$1,5-billion a year in the short term, according to Mody.

In addition to removing constraints, the Indian government is actively encouraging investment in the auto sector. Having identified the Indian automotive industry as a “locomotive for growth,” the government of India, in consultation with Acma and the Society of Indian Automobile Manufacturers (Siam), has set the following targets:

•    Increase investment in production capacity by US$15-Billion over next 10 years
Establish partnerships in India and abroad - encourage global Tier 2/3 suppliers to look for JV opportunities and technology partnerships with Indian Tier 2/3 companies.

•    Invest in or acquire companies overseas (to get close to the customer, improve global supply capability)

•    Establish green-field manufacturing footprints overseas
In order to grow the capability of Indian component suppliers, training programmes have been established to:

•    Ensure proficiency in Understanding Technical Drawings, specifications and well conversant in all Global Automotive Standards : American, Japanese, Korean, European, etc.

•    Invest in appropriate automation in order to reduce product costs. Productivity is already improving by 20% a year, according to the “Automotive Mission Plan 2006 to 2016”.

•    Ensure flexibility in small-batch production

•    Grow IT capability for design, development and simulation

The measurable objective are:

•    By 2016, the Indian auto industry will contribute 10% of the country’s GDP and 30 to 35% of industry GDP. 

•    Turnover from US$35-bn to US$145-bn, exports from $4.1-bn to US$35-bn; and employ more than 25 million people.

Acma 

Acma represents over 479 companies, and is actively involved in trade promotion, technology up-gradation, quality enhancement, and the collection and dissemination of information. Its other activities include participation in international trade fairs, sending trade delegations overseas and bringing out publications on various subjects related to the automotive industry.

For the exchange of information and especially for co-operation in trade matters, ACMA has signed Memoranda of Understanding with its counterparts in USA, Canada, UK, France, Italy, Spain, Japan, South Korea, Malaysia, Uzbekistan, Pakistan, Australia, Egypt, Iran, Tunisia, South Africa. Thailand and Scandinavia.

Siam

Siam represents 38 leading vehicle and vehicular engine manufacturers in India. Siam provides a window to the Indian Automobile industry and aims to enhance exchanges and communication, expand economics, trade and technical cooperation between the automotive industry and its international counterparts.
Siam also interacts with worldwide experts to assess the global trends and developments shaping the Automotive Industry. It has been actively pursuing issues like Frontier Technologies such as telematics, the promotion of alternative fuels including hydrogen energy for automotive use through cell vehicles and harmonization of safety and emission.

The Indian auto industry by the number:

•    Largest three wheeler market in the world
•    Second largest two wheeler market in the world
•    Fourth largest passenger vehicle market in Asia
•    Fourth largest tractor market in the world
•    Fifth largest commercial vehicle market in the world

Future Growth Drivers

•    Higher GDP Growth
•    India's huge geographic spread
•    Increasing road development
•    Increasing disposable income
•    Replacement of aging four wheelers
•    Graduating from two wheelers to four wheelers
•    Increasing disposable income of rural agri sector
•    Growing concept of a second vehicle in urban areas

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