India is turning out to be a global hub for exporting small cars. Manufacturers such as Ford and Renault already use their Indian base to produce some of their best sellers across the globe. Basically, companies are trying to cash benefits from India's low-budget manufacturing capabilities.
US carmaker Ford, exports its Figo hatchback and the EcoSport compact sport-utility vehicle from India. Further, the company plans to develop a new generation 'Dragon' series of small-capacity petrol engines. Ford's Dragon range of engines is likely to be ready by 2016-17, and the company plans to produce 1.5 million units of the 1.2-litre and 1.5-litre engines a year globally.
Currently, Renault's R & D unit in Chennai is developing a 986 cc petrol engine in collaboration with the facilities in Brazil and Europe which has been codenamed as B4D. The B4D is an enhanced version of a 0.8 litre engine that the company plans to use in a car which will do its debut in 2015-16.
According to Mr. Deepesh Rathore, director of EMMAAA (Emerging Markets Automotive Advisors), an automotive research and advisory firm specialising in emerging markets, manufacturing in India is a good 30% more cost-effective than the matured base such as Europe.
"There are competent suppliers in India. With volumes getting larger, it is natural for companies to source key modules of cars like engines and transmission from this country." Rathore added.
In a recent interview with ET, Ford India managing director Joginder Singh had underlined the importance of exports and said that using India as a manufacturing base for exports would also help the company in delivering global products and design at an affordable cost to local consumers.
"We are encouraging them to develop local capabilities. My thinking is localisation will also happen with more complicated technologies like the power train," said Singh.