ASSOCHAM's National Council on Automotive industry, along with the Ministry of Heavy Industry, Government of India and world's leading Auto Consultant Roland Berger Strategy Consultants organized the Second World Auto Congress here in New Delhi. The main agenda behind this was to identify the challenges and the emerging opportunities in the Auto Industry.
Indian Automobile Sector is an example of manufacturing success, becoming an export hub for the Automobile and the Auto Components sectors. With the Prime Minister of India, Shri Narendra Modi, announcing the "Make in India" policy inviting companies from all over the world to setup their manufacturing base in India. India itself is a big market and now all the resources are available in India. By 2015 India is expected to be the world's fourth largest automotive market and is expected to sell 6 million plus cars annually by 2020.
"As china moves from "Make" to "Innovate" India is uniquely positioned to profit from this opportunity. Consistent reform will be unneccessary to ensure that we think and act ie design, innovate and manufacture", Dr. Wilfried Aulbur, Managing Partner Roland Berger and Chairman National Automotive Council, India. Asia, and in particular India remains an important engine of global market despite strengthening recovery in advanced economies. With the new government into power, expectations are high and overall sentiments are improving. India has grown at a CAGR (Compound Annual Growth Rate) of 7.5 percent over last ten years despite a slowdown in the economy in the past two years.
Factors such as poor infrastructure, cumbersome procedures and labour law complexities limit investor confidence. Therefore the new government has undertaken a major campaign to position India as a major investor friendly manufacturing destination. The Automotive Mission Plan, 2006-16, is expected to emerge as the World's destination of choice for design and manufacture of Automobiles and Auto Components with output reaching a level of US $ 145 billion, accounting for more than 10% of the GDP and therefore creating more employment opportunities to 25 million people by 2016.
Shri Dharmendra Pradhan, Hon'ble Minister of State (Independent Charge), Ministry of Petroleum & Natural Gas, Government of was the "Chief Guest". His main agenda was towards the growth of economy in double digit. According to him, the excise duty hike burden will not be passed on to consumers but aimed to meet the revenue deficit. The fall in international oil prices had resulted in six consecutive reductions in petrol and diesel prices and if international oil prices continue to fall, the benefit will certainly be passed on to consumers. In this legacy, we inherited a bankrupt economy. We are also committed to provide power, water and basic healthcare facility to all villages. For this, the government had to take a certain steps to meet the revenue deficit without burdening the consumer, said Mr. Pradhan.
Auto industry is the best place to create jobs in India and it should be encouraged and nurtured towards growth, said Mr. R C Bhargava, Chairman, Maruti Suzuki India Limited. Share of manufacturers is declining at a rate of 15-20% in GDP. A 30-45% share should be there in GDP if more and more job opportunities have to be created.
He also said that the National Green Tribunal's (NGT) ruling barring vehicles more than 15 years old from plying on Delhi roads is likely to have an impact in curbing automobile pollution and also increase the sale of cars in Delhi. The popular Maruti Suzuki Swift has failed the latest round of Indian crash tests carried out by Global NCAP (New Car Assessment Programme). On this note, Mr. Bhargava said, “Maruti doesn’t accept NCAP Safety Rating”. He said that if carmakers incorporate such features in even entry-level cars, obviously the price would go up, which would lead consumers to opt for two-wheelers, which would be more unsafe.
The Indian Automobile Industry produced a total 1.69 million cars including passenger vehicles, commercial vehicles, three wheelers and two wheelers in August 2013 as against 1.56 million in August 2012 As a result it registered a growth of 8.18 percent over the same month last year. Going forward, Indian passenger vehicle demand is expected to grow by 9.3% p.a. to reach 5 Million units by 2020. Indian OEMs also need to buckle up in order to tackle challenges of stringent emission norms, skilled manpower, safety norms in vehicles etc. Indian 2-wheeler demand, which was at 13.8 Million units in 2013, is expected to grow at 8.9% p.a. and reach 25 million units by 2020. Regulatory environment in India is also getting challenging for OEMs. Emission and safety norms are set to get more stringent and new laws for recalls and end-of-life expected to be introduced.
The cumulative foreign direct investment (FDI) inflow into the Indian Automobile Industry during April 2000 to July 2013 was recorded at US$ 8,932 million, amounting to 4.5 per cent of the total FDI inflows (in terms of US$). Global OEMs are not only setting up plants in India but also to use India as a major export hub. This clearly point towards that Indian auto sector would witness increased competition with more brands being launched by OEMs.
The event also addressed impact of key regulations including the Road and Safety Bill, 2014, "Clean Transportation Programme". Dr. Ch. Ravi Sekhar, Senior Scientist, Transportation Planning Division CSIR, talked about, "Better infrastructure and modern data collection methods can promote sustainable transportation system". The new government is working towards these measure. Let's think: Act! should be our motto for more developed India all over the world, Dr. Wilfried Aulbur said at the end.
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