Technology comparison and operational pattern automotive manufacturers in India
In recent
years Indian automotive manufacturers have come a long way when it comes to
technology. Through organic growth, joint ventures and technology partnership
the manufacturers have gained a lot of access of technology. But till date
there is a huge difference in terms of technology when it comes to their
western counterparts. Because of low cost manufacturing a lot of companies have
transferred their manufacturing facility in Asia and India certainly got
benefitted with that.
High import
duty on fully build vehicles and SKD kit has forced to assemble all the
vehicles in India. According to SIAM data almost 99% of the vehicles sild in
India has been assembled in India. Some industry critique has suggested that
the manufacturers have been importing component to India to get them assembled
and sold in India. Since the component tariff is only about 7.5% they are able
to get the profit where the technology and manufacturing is happening at some
other place. This is partly true since India imports about $ 14 billion worth
component (ACMA report) and at the same time exports about $ 10 billion worth
component. Yes there is a difference of $ 4 billion. When you see that in
comparison to $ 75 billion worth industry $ 4 billion is not very big. And the
manufacturer importing majority components to assemble the vehicle is a very niche
and small portion.
Engine the pain point of the industry
This particular
pattern makes sure that market competitive components are in place in Indian
automotive products. But when it comes to engine it’s a different story.
Compared to Japanese and European manufacturers most of the Indian manufacturer
have a inferior quality engine. This is one place Indian industry is very much
dependent on western world. They either source engine or collaborate for engine
or makes joint venture to get the access of engines. At the same time companies
from the developed world have an upper hand on their operations in India since they totally control the engine area. To
some extent the whole market is dependent for engine technology on developed world.
In addition
a lot of efforts and money is spent on tuning those products to suit Indian
requirement. A lot of engine consulting companies make huge money in this
direction.
Strategic need of the market to get rid of engine
India has
serious fuel availability issue and at the same time have issue with the engine. When the
whole world is moving towards the future, India should invest heavily on the
possibility of removing the engine all together. Developed world need
performance vehicles and electric vehicles certainly have limitation till date
in that direction. But the Indian circumstances will make it easier to adopt
electric vehicles.
I totally
understand the infrastructural, the technology requirement and challenges the
Electric vehicle industry have. But it is new in all countries now. Moreover we
are the one who need it maximum.
Western
world is using Hybrid vehicles as a transition from normal vehicles to electric
vehicle but if India follows the same route then it will make the Indian market
dependent for another additional 20 years. Directly jumping to electric vehicle
India can avoid the whole trend all together. Making investment right from the
beginning towards the direction of electric infrastructure will pay India in a
long run.
In addition
India’s current push in the energy direction makes it more aligned with the
future goals. India’s transport need is going to increase in a exponential rate
as the infrastructure improves and economy develops. To go ahead India need to
skip the Hybrid vehicle phase.
Looking at the need from the above mentioned angle makes it absolulely necessary to use electric vehicle treand and avoid hybrid vehicle treand.
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