While government policies helped Japan and Korea, protect that nascent auto industries, no amount of policy interventions in India seem to be able to push our Auto industry to compete globally.
BHPian Isjey recently shared this with other enthusiasts.
I’ve always aspired to see Indian auto industry, compete globally through products designed and manufactured in India. Now that India in herself a big (3rd largest) market, this aspiration of mine has only been stoked more.
In order for a country to develop a new industry that can compete globally, a few key components are required:
- Visionary business leaders: We can find examples of many auto companies from countries which were nothing in auto industry, but have become greats in global auto industry. Some of such companies are Hyundai, Toyota, Honda etc. All these companies were lead by visionaries during the key phase of growth.
- A protectionist government policies to support the weak local players. Korea and Japan had protectionist policies to support their Auto industry during their development phase. IMO in India too, there are many supportive policies right from the liberalisation times. We have had many export promotion schemes like EEZs. Now we have FAME, PLI, make in India and more.
- Availability of quality workers and engineers, who can learn newer technologies and business management best practices, adapt to our conditions and make them work.
India does have all these components. But still our auto companies are not selling products that can compete globally. I searched around for some data to refine the question that I had and to shed some light on answers.
I found some data on industrial robots, which I’m putting in the next post. Without automation, we cannot increase productivity, quality and reduce costs. Without these aspects nailed down, IMHO we cannot compete globally.
While government policies helped Japan and Korea, protect that nascent auto industries, no amount of policy interventions in India seem to be able to push our Auto industry to compete globally.
Here goes some data points regards to usage of robots in the general and in Auto Industry.
Starting with those countries which use the a greater proportion of robots:
And Auto industry uses the second most numbers of robots, second only to the electronics industry.
Source 1: A one million robots work in global car industry.
However, India’s share is very measly and please note this is an aggregate number and not specific only to Auto Industry. Source 2
Just as a comparison, here is the global operational stock
And here is the forecast in robot adoption worldwide:
Source 3: I’ve been following this blog for sometime and this particular post “Can India Industrialize?”, is very interesting. We are lagging Bangladesh and Vietnam too. We’re lagging in manufacturing compared to these countries.
Now comes some frustrating questions:
1. We keep seeing car manufacturers showing some export numbers. But this does not mean we are producing cars that are globally competitive. Is this the maximum that we can export? This news shares latest numbers on exports from auto industry, and slew of policy initiatives of GoI
passenger vehicles, including cars increased to 5,77,875 in 2021-22 from 4,04,397 in 2020-21, registering a growth of 42.9%
2. Is the reason for not having much of automation the reason for so many niggles that we encounter in cars made in India? If robots are highly efficient, why are we not having much of them? Is our labor that cheap?
3. One key factor in selling our cars globally is to have a good sales/service channel globally, and this could be a very costly one to establish. Is this the reason?
4. When will we see our auto industry competing globally and coming out tops? Is this a pipe dream? Our manufacturing portion of exports is lower than that of Bangladesh. Will we ever industrialise?
There is some cheer though as I read this news: Toyota India starts exporting EV components to Japan
This is good dividends for GoI’s policy for the the Auto sector. This is how a government should extract training, technology and know-how to develop a new industry in their country!
“The e-Drive is a very complex technology, mastering which requires years of planning and months of execution,” a senior member of the Society of Automotive Engineers India told FE. “The fact that Toyota India is exporting it to Japan is a shot in the arm for the Make in India initiative, especially considering that the quality standards of the Japanese market are the toughest to meet in the world.”
Keyword: State of Automation in the Indian Car Industry