In 2007 over 1.5 million passenger vehicles, 8 million two-wheelers and half a million commercial vehicles were sold in India. Despite blips in certain segments in 2007, hope is that in 2008 growth would continue and cut across sectors. By 2016, it is expected to be a $ 145 billion industry. Even with these numbers, India has a tremendous transport deficit; seven cars, 45 two-wheelers and 0.7 buses per thousand persons. Lower than most of our neighbours and many developing countries. Congestion is a perceived urban phenomena. On an average, India has 3.5 four-wheelers per km of road space, this is lower than all comparable countries such as Brazil, Mexico, Thailand, Indonesia and Malaysia. Even if we take Delhi at 47.5 per km, it is still lower than the other country-averages.
India’s auto industry is just a little over 14 years old. Yet over the past few years, a number of small steps that were taken — including overseas acquisitions of component firms, design houses and automotive firms, the setting up of manufacturing facilities outside India and new strategic alliances in the country or globally — indicated that Indian firms were going global and global firms were looking at India differently. Over Rs 7,50,000 crore ($ 16 billion) of investment is underway in this sector and would increase as more firms look at investing in India or existing firms acquire firms overseas. Importantly, the Auto Expo demonstrates the leadership of the automotive industry in addressing the twin issues of energy and environment while meeting the goals of the Automotive Mission Plan 2016.
Take the example of the many companies from overseas who are participating. Each one of them is in the process of developing a vehicle to suit the needs of the consumer in India and similar countries. Small cars, multi-utility vehicles luxury cars, bikes are the need and, interestingly, the focus for most is on the total cost of ownership. That means low initial cost and low cost of running and maintenance. Many are displaying alternate fuel vehicles, hybrids, hydrogen vehicles, electric vehicles or bio-fuel vehicles. Each is either in the process of expanding production or has announced new investment plans. The fillip that this provides manufacturing in India and the investments thereby reflects the faith in skills available here.
Of course, there are gaps and a talent crunch in certain specialised, but industry is working proactively to address this. The participation of many firms is to form new alliances or joint ventures. The idea is to access the Indian market or make India a hub for production of specific products or research and development.
Indian companies have demonstrated new prototypes, concepts and launched several new products across the two-wheelers, cars, commercial vehicles and buses segments. While many of the products on display are meant to address the Indian consumer, there are several meant for the global market. The process of the integration of the Indian and global markets is clearly underway.
In the initial stages of their development, countries such as Japan, Germany, China and Korea were faced with the issue of quality of products manufactured. Through a variety of strategies Germany, Japan and Korea have changed the image of automobiles made in their country. Although there has been significant advancement of manufacturing in India, there is still a difference in the way Indian IT and manufactured products are viewed. Therefore, it is significant that two of the three bidders for Jaguar and Land Rover are Indian firms. This signifies the belief of the firms that they have the capability, skills, talent and wherewithal to take a luxury brand and add value to it. To date, no major luxury brand has made India its base for manufacture. So the Jaguar/Land Rover deal, as and when it comes through, may be the catalyst to change this scenario and, in many ways, change the perception of products manufactured by Indian firms in India. Such deals present an opportunity to expand product range, access technology, enter new segments and markets, but do have the challenges of integration, execution and management.
Auto Expo also presents an opportunity to educate and inform people about the trends and developments in technology. There are pavilions on infotronics, alternate fuels, design robotics and components. Perhaps the most mis-understood fuel in India is diesel. The diesel engine is, undoubtedly, the most efficient engine the world has seen so far. Diesel vehicles are no longer smoky, noisy or polluting. They emit less greenhouse gases and would be an integral part of the mobility solution in the years ahead as is happening in other parts of the world. Modern diesel cars in India emit 300 per cent less than the designated standard for particulate matter and are cleaner than many equivalent technology diesel vehicles of the past. The diesel pavilion showcases these developments and facts.
The launch of the ‘people’s car’, the Tata Nano, was a landmark event for the Auto Expo, for the automotive industry and for India. It is a significant achievement. What has emerged very clearly is that given inspirational leadership, the space and freedom to work and the necessary support and encouragement, it is possible to make seemingly impossible products or projects come to fruition in India. Again, this is a first and more are bound to follow.
A huge number of citizens across India do not have access to transport of any kind when they want it or where they need it. For the majority, alternate means of mobility have been completely out of reach. All this will now change. Given that the average distance of facilities like a district court, a nursing home, a child welfare centre or adult literacy centre, a college or a railway station from a village is over 15 km in India, the lack of mobility is a tremendous disadvantage. Sooner than later, this lack of transport would retard any attempts at inclusive growth. Even the average distance of a bus stop is 4 km from a village.
The aam admi is the ultimate beneficiary.
Dilip Chenoy is Director General, Society of Indian Automobile Manufacturers