India’s auto industry looks to expand and harness export potential

September 9, 2020

The Society of Indian Automobile Manufacturers (SIAM), a not-for-profit national body representing all major vehicle and vehicular engine manufacturers in India, hosted its 60th Annual Convention ‘Re-Building the Nation, Responsibly’ virtually on September 4, 2020.

During the convention, the panellists discussed possible ways to help foster increased localisation in the Indian automobile sector, improve ease-of-doing-business scenarios in the country, and considered steps to be undertaken to create ‘Brand India’, so as to harness the country’s export potential. They deliberated on viable pathways which will lay the groundwork for an Atmanirbhar automotive sector (‘Atmanirbhar Bharat’ is the name given to the vision of the current Prime Minister of India, Narendra Modi, to make India a self-reliant nation).

Dr Pawan Goenka, past president of SIAM and Managing Director of Mahindra & Mahindra, commented, “The auto-Industry today is a shining example of Atmanirbhar Bharat. Apart from the last year, the sector has been growing at 16% CAGR over the last twenty-five years, and that is truly an impressive number to reckon with.”

Dr Goenka continued, “The sector has made sizable investments in R&D and currently employs around 37 million people in the entire value chain. Going forward, we will look at augmenting our exports, reduce imports, create more jobs and up our investments in R&D. In the automotive components space, our imports are to the tune of 1 Lac crore and we are looking at reducing the number in four to five years. For this to happen, we need to rethink, re-strategise, reorganise and implement steps such as reducing current logistics costs, relaxing duties and taxes, entering into FTAs and similar other trading prerequisites with bigger automobile markets.”

He added, “India is currently the largest exporter to Central and South America. 40% of our export volume currently goes to these markets, followed by central and East Africa. However, it is important to note that exports now account for 16% of our total output, which indicates a lot of room for expansion.”

Shri Piyush Goyal, Hon’ble Union Minister of Commerce & Industry and Railways, Government of India, explained that in order to produce world-class export-fit products domestically. “We need to build Global-scale plants in the auto sector that are at par with international standards,” he stated. “We should aim at improving the scale and quality of what we are producing and export it to the rest of the world. The key is to create a sustainable value chain.”

“In the COVID-19 era, we have seen the demand for shared mobility fizzing away, which was once the talk of the town. Current trends indicate that people will continue to buy cars, try out self-drive, autonomous and EVs, and therefore, as a corollary, the automobile sector’s health would eventually improve,” he stated. 

“We are a listening government and we will continue to do all that we can to help the auto industry. We will also look at devising innovative models to boost exports. Some of these that are currently prevalent include, the credit guarantee model, creating automotive hubs and clusters, partnering with states to make land availability easier, and adopt a more competitive approach to domestic manufacturing.”

Goyal added, “Best-in-class make and design, use of innovative technologies, smart packaging and intelligent product pricing can go a long way in fetching desired results. Skilling is another aspect that needs to be looked into if we are to ace in domestic manufacturing. Upskilling and reskilling should be treated as a priority and an industry-academia partnership is one of the best available models to achieve this goal.”

Deepak Jain, president of the ACMA and chairman and Managing Director of Lumax Industries, stated, “I have personally witnessed many marathon meetings across many industry sectors and government on localisation. I am also very grateful to Piyush ji for recognising the auto component industry as a champion sector that maximises its potential in exports.”

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