It is one week since the ACMA and SIAM annual conventions concluded and the best time to share my views on what I saw, heard and observed about a USD 240 billion industry that makes up for 40% of India’s manufacturing GDP and contributes around 6.8% of national GDP.
While this was my 11th SIAM convention in a row, it was my first ACMA attendance, hence a higher sense of excitement at soaking in from that part of the Indian auto industry that has played a stellar role in holding our flag high.
The “ maahaul”…
In Urdu there is a word “maahaul” which simply means environment. Deep down it implies the sentiment or mood. Now, the mood of an annual event such as this is obviously set by the overall mood of the nation. Hence, pensive. The mood in the ‘durbar hall’ was pensive.
The more I think about it, the more the name of the hall where the event is held every year sounds very Orwellian. It is the annual grand durbar when the ultimate powers share their pearls of wisdom while the gathering claps.
The classic demonstration of the “maahaul” was when Shri Piyush Goyal said that as India is going to move up from being the world’s 5th largest to 3rd largest economy by 2030, by the same logic as we are the world’s 3rd largest automobile market, we should be…yes…you guessed right…number 1 by 2030. And everyone clapped!
Not 3rd, but the 2nd largest
Time and again speakers and ministers lauded India as the world’s 3rd largest automobile market. Not one person from the 2-wheeler industry got up and corrected that we are the 2nd largest. Our obsession with the 4-wheeler makes us forget the fact that we possibly have the world’s finest 2-wheeler industry right now, in terms of offerings, capabilities and capacities.
The domestic 2-wheeler market is slowly clawing back to FY2018 levels while we exported close to 3.5 million units in FY2024. Pardon me borrowing the tagline, but the Indian two-wheeler is the truly “global Indian” automotive showcase to the world.
The 2-wheeler user forms the base of the 4-wheeler market pyramid. Unless we focus on getting the 2-wheeler market zooming as fast as possible, we cannot ever dream of a sustainable recovery and growth of the 4-wheeler market, leave alone becoming number 1 ever.
“We do what OEMs ask us to do!”
The Indian component industry has always been more adventurous and bold in its approach to business expansion, by the very nature of its strategy to succeed and sustain. It has created the ‘spread’ needed for market domination, but does it have the ‘depth’? Simply put, are we creating entirely new things by ourselves that the world then adopts? Are we spending enough on tech and skills, the two final frontiers for sustainable development?
CEOs of two leading Indian component makers, when asked as how do they see the future said, “We do what the OEMs ask us to do.” They cannot be the exceptions. They are the harsh reality. R&D spend is still less than 1.5% of total sectoral revenues. If we look deep into that spend, it will be more on process engineering than product. There will be a few in the fraternity who are doing some cutting edge work, but the larger SoP is to wait for the automaker’s “orders” to start working on.
We need to decide as to for how long will we wish to remain in this state.
“Moral responsibility” indeed
Talking of state, a very senior government official made a statement that the Indian auto industry needs to take moral responsibility of making the vehicles and therefore work on road safety. Extending this logic, we need to take care of the pediatric wards in hospitals for all the children we produce and the distcoms for all the consumer durables we make.
The government still does not recognise that providing world-class infrastructure to operate world-class vehicles will be the only way to world-class mobility. It still does not accept the industry as an adult of equal stature.
The volte face moments
How can we have a SIAM convention without them? Being my first ACMA attendance, I realised even the component makers were not denied their share of picking up their jaws, rolling back their eyeballs and scratching their heads.
The minister, once again, told us of his love-hate relationship with fossil fuels. The bureaucrat casually announced a relook at the scrappage policy as if there would be no collateral damage. We obviously do not have the concept of a “beta testing” in the government. Real-world empirical studies, at the cost of the customer and the industry, is the norm.
Yet the hall clapped. Making me wonder whether it was Orwellian or Kafkaesque. The media of course lapped up every such moment as it is terrific content for them. As one very senior auto veteran quipped to me, “This is like a David Dhawan movie!”
Time to target for tariffs
Above all, where are the big decisions and announcements? There were none. As an industry, you cannot be meeting year after year, decade after decade…just to continue meeting! This is a once in a year platform where both the industry and the policy maker should make milestone announcements.
No targets on vehicle penetration by 2030, across categories.
No targets on R&D spending by 2030.
No announcements on investments in skill enhancement.
No targets on improving public transport by 2047.
No target for attracting tariffs.
Yes, no target on attracting tariffs on Indian vehicles.
Just imagine that as the BIG goal.
Now, why does one country impose a tariff on another?
When the importing country is really frightened of the exporter’s product or solution gobbling up domestic players. That happens when the foreign product or solution is far superior and relevant to customer needs than what the domestic system offers. The act of European and North American countries imposing tariffs on Chinese automobiles is a clear sign that our neighbours have reached a stage of evolution that makes the legacy powerhouses vulnerable.
That is what the Indian automobile industry should aim for.
At least 2-3 Indian automobiles attracting tariffs in key global markets in the next 10 years.
We would have arrived, in style, with swag!
Jai Hind.
