'India will soon lead as an Auto hub'

Source : Financial Express
Author : Anang Dev Jena
News Date : Saturday, January 13, 2007

The important question asked nowadays - is India becoming one of the leading export hubs for the international automotive community?

The answer is -If not now then it is moving in the right direction to become one of the leading export hubs for the automotive manufacturers. Everyone knows some of the basic competitive advantages that India offers such as availability of Technical manpower in abundance, relatively cheaper manpower, and command over English language and now, friendly government policies.

In my view, across various industries, the automotive industry is most well placed in terms of becoming one of the largest export hubs for most of the global players, some of the key reasons, apart from the basic general competitive advantages are:

Covering the entire product life cycle: Many global automotive players have moved their R&D departments to India - outsourcing research and design elements of the automotive products. This gives a definite edge to India since, India would have the entire product development and production at one base, right from designing a car to manufacturing it and subsequently, exporting it. This provides a far higher degree of integration and obviously, tremendous costs savings. This factor also makes India more attractive than China where most majors have not set up research and development centers.

Talented and skilled manpower: This provides an additional benefit to the manufacturers, not just in terms of producing quality output as desired, but also an element of creativity, where skilled manpower is not just a resource expected to follow instructions but contributing in a more constructive manner towards more holistic development.

Large domestic automotive market: India itself is a large domestic automotive market in itself and is growing fast. Hence, it need not only depend on exports for its automotive industry to survive, in fact, it encourages all international automotive manufacturers to have their hubs here. Once a manufacturer establishes a hub, then only it can start thinking about export potential.

Large exporter of automotive components: India is already a large exporter of automotive components; hence, it is a natural progression from automotive components to the export of final product. For the exporters, the sourcing of materials from vendors actually becomes a source of income by cutting down on transportations costs of the automotive components.

In my view, India is already one of the top export hubs for the automotive industry and it is not very far when we will see India as the leading export hub for most automotive industries around the globe.

-The author is head , TNS Automotive Research, Asia Pacific