Experts suggest a five-point agenda to revive growth of Indian Auto sector

Cross-disciplinary vocational training, aggressive R&D, Smart Green policies & PPP models must to revolutionize Indian Auto Sector: Ajay Shankar

“Adoption of innovative green technologies, Cross-disciplinary vocational training and aggressive R&D can change the face of Indian Auto Industry in the next decade”, emphasized Mr Ajay Shankar, Member Secretary, National Manufacturing Competitiveness Council (NMCC), while addressing the CII International Conference on World Class Technologies for Sustainable Growth of Automotive Industry organised by Confederation of Indian Industry (CII), here today.

“A strong collaboration between Industry, Government and Academia is the key to provide the much needed impetus to the Auto sector, which is experiencing a sluggish phase”, he added.

Calling the Indian Auto sector as the most vibrant industry, he informed that, “The automobile industry is one of India’s major sectors; accounting for 22% of the country’s manufacturing GDP. The Indian auto industry, comprising passenger cars, two-wheelers, three-wheelers and commercial vehicles, is the seventh-largest in the world with an annual production of 17.5 million vehicles, of which 2.3 million are exported. Indian Auto market has the potential to dominate the Global auto industry, provided, a conducive environment is created for Potential innovators to come up with new pilot projects.”

Emphasizing the need for developing sustainable Auto technologies, Mr Shankar further added that “The coming century will be the century of Smart Cities, where emissions will be zero and Carbon foot print will be nominal.  So the Indian Auto Sector needs to aggressively focus on development of world-class smart vehicles. I call upon CII and its members to actively campaign and communicate the need, successes, ways and benefits of Sustainable Growth of Automotive Industry.”

Focusing on the need of cooperation, Mr Sunil Kant Munjal, Past President, CII & Joint Managing Director, Hero MotoCorp Ltd. shared that “Technology never works in isolation. So it is high time Indian Auto Sector connected efficiently with Korean, Japanese, American markets to make a significant mark on global map. There is a dire need of strong competitive corporate cooperation for development of innovative business models to attain holistic growth of the sector.”

“Integrated multi-model transport system will be the future of the Auto Sector, So we need to establish world-class training institutes, with a cross disciplinary approach. Focus of these institutes should be not only be development of relevant ideas but on development of pilots and patents,” he added.

He also called upon the women entrepreneurs to come forward and actively participate in the development process of the sector.

Suggesting a 5-point agenda for revitalizing growth of the Indian Auto Sector, Dr Wilfried Aulbur, Managing Partner, Roland Berger Strategy Consultants, the Knowledge Partners for the Conference, said that “By the year 2050, 75 per cent of the world population will be urban, which directly inclines to the need of advanced mass transit system. In such a scenario, the Auto Industry around the world needs to follow a simple five-point agenda to revive its growth: Focus on R&D, Development of International tie-ups between big as well as budding auto houses across the globe, Evolution of light weight vehicles, Focus on zero-emission technologies and Sustainable production supply chain.”

Citing examples of Google and Apple, he said that “The auto industry needs to adopt advanced business models and develop such vehicles that are pocket as well as environment friendly.”

A report- Automotive Landscape 2025, prepared by CII and Roland Berger was also released on the occasion.

Expressing concern over the low expenditure on R&D in Indian Auto Sector, Mr Harish Lakshman, President, ACMA &, Managing Director, Rane TRW Steering Systems, said “Only 1 per cent of the sales revenue is spent on R&D in India, which is over 5 per cent in countries like Germany and Korea. This is quite evident to prove the fact that Research and Development has been ignored by the Indian Auto Sector. In such scenario, the sector needs to focus upon this area tremendously.”

Further, talking about the challenges being faced by the Indian Auto Sector, he said, “On one hand, the input cost is increasing and on the other hand demand for low cost vehicles is on a rise. In such a situation, adoption of simple yet responsible corporate behaviour and upgradation of technologies is required. We must also focus aggressively on adoption of green technologies at each and every step of production-supply chain, so as to develop new improved eco-system”.

Citing examples of Google and Apple, he said that “The future of mobility will be marked by growth of light utility vehicles and mass transit. So, the auto industry needs to adopt advanced business models and develop such vehicles that are pocket as well as environment friendly.”

Mr Jayant Davar, Chairman CII NR and MD, Sandhar Technologies Ltd, said “India is poised to be one of the fastest growing automotive markets worldwide over the next decade and to harness this opportunity, effective management of the short term challenges, conducive environment for R & D, implementation of sustainable strategies and strong Industry – Academia – Government partnership are the keys. This Conference proved to be an apt platform to chalk a roadmap for sustainable growth of auto industry,”

He also laid emphasis on development of future generation vehicles that are not only based on zero-emissions concept but also focus on positive emissions to safeguard the environment.

Experts from world’s leading Vehicle and Component Manufacturers like Hero MotoCorp Ltd, FIAT Chrysler India, Mercedes-Benz, Maruti Suzuki India Limited, Volkswagen India Pvt Ltd, Mahindra & Mahindra Ltd, Siemens Industry Software (I) Pvt. Ltd and Bosch, shared their experiences on different facets of recent technological advancements in the automobile industry with a view to make Indian Industry stronger, cost effective and globally competitive during the Conference.  

Real Estate Regulation and Development Bill

The Cabinet nod for the proposed Real Estate Regulation and Development Bill, which has been pending since 2007, is a welcome move.

CII has always favoured setting of an institutional mechanism to improve the image of this crucial Sector for Indian economy and setting up of a Regulator is a step in the right direction. Though we must also keep in mind that multiple Acts and Rules exist for protection of consumer interests for any deficient services in any sector and hence it needs to be ensured that the proposed Real Estate Regulatory Authority (RERA) does not end up merely replicating various functional roles.

While it is also laudatory that the proposed Bill calls for launching of projects only after getting all statutory clearances, it should equally be the responsibility of the proposed Regulator to ensure that the competent authorities make available their approvals within specified time limits.

Another provision in the proposed Bill makes it mandatory for a developer to maintain a separate bank account for every project to ensure that the money raised for one project is not diverted. Retaining amounts realized from allottees and placing in Banks would affect the financial cash flows for projects and even more so for metropolitan cities where land cost component is significant and already paid by promoter. If at all such an account is to be maintained, the limit should be on a lower side and include payment of interest and EMI pertaining to loans availed for construction of the said project.

It is also heartening to note that all the Real Estate Agents are required to be registered with the proposed Authority, as it will help detect money trail and curb money laundering.

At the same time, provision in the Bill pertaining to return of money to customer with interest in case of delay is well meant, it should also be borne in mind that any regulatory frame work should cover all stake holders- promoter, customer [allottee] and competent Authority and all obligations should be evenly distributed.

Retail FDI, a game-changer

The announcement on notifying 100 per cent FDI in single brand retail, and opening up multi-brand retail to FDI is a welcome move, and sparks hopes of restoring investor confidence and attracting more funds from overseas. It is worth reiterating the benefits expected from this move.

To read more: http://cii.in/WebCMS/Upload/HBL17Sept12.pdf

A Growing Stake

Encapsulating contributions of Indian companies in USA, Mr Banerjee expresses that policymakers in the US will take into account the positive story of the India-US trade and commercial relationship, especially in the context of the IT industry and will help foster a business climate and labour environment that is conducive to the growth of business on both sides.

To read more: http://cii.in/WebCMS/Upload/ET-DG-6-Sept-12.pdf