Indra’s Drishtikona (Viewpoint)

News and Views, Thursday, September 23,2004

Posted : September 23, 2004 at 12:57 pm [IST]

Dragon may run away with auto outsourcing: The current momentum in the outsourcing of auto components to India faces a challenge from China and Vietnam.

Auto component manufacturers need to upgrade from being regular order suppliers to partnering suppliers and identify what the global OEMs are looking for. OEMs are increasingly looking for component manufacturers that provide complete services from concept to design, tooling to manufacturing with a scale that delivers a 15% cost reduction on a landed basis in India. Component manufacturers are transforming themselves from local ancillary manufacturers to globally-competitive automotive players.

India offers significantly lower labour costs that seem to be the main driver of the current momentum. For instance, the average hourly wages for a graduate/skilled worker in India is $7 against $30-50 in most developed countries and $15-40 in developing countries. That can be the main reason for the increase of export that in 2004 was $1bn-worth and is expected to touch $2.6bn by ‘06. But auto component manufacturers must do some thing more and fast to face the challenge from other cheaper sources. It is possible if the industry gets into innovative mode and improves upon its R&D.

$2.5 bn World Bank loan for India this year: World Bank is expected to extend $2.5 billion loans to India this fiscal, which is lower than the targeted $3 billion annually during 2004-07.
World Bank loans are expected to cover projects of PowerGrid Corporation ($300-500million), and National Highways Authority of India ($600 million for completing the Luhnow-Muzaffarpur stretch)..
Italso provides assistance for e-governance project, social sectors, the universal education scheme Sarva Shiksha Abhiyan, Reproductive and Child Health programme, and for the existing schemes on diseases like AIDS, TB, malaria and polio.

Reliance to start services in 3,600 towns: Reliance Infocomm will expand its CDMA mobile services to 3,600 more towns within four months and expects its subscriber base to touch 10 million by early next year. Reliance is currently present in 1,100 towns By first quarter of calendar year 2005 the company would be able to cover the entire country except Jammu and Kashmir. Infocomm has presently 8.3 million customers in the circles it operates in.
The company has so far spent Rs 15,000 crore (Rs 150 billion) on the roll-out of operations and in the next three years it will spend Rs 10,000 crore (Rs 100 billion). The company had said when it began services in late 2002 that it would spend Rs 25,000 crore (Rs 250 billion) over next five years on rolling out services

india is going fast in telecom sector. At present, there are 43 million fixed phone lines in the country and 40 million mobile subscribers-implying a phone for every eight Indians.

SAS Motors launches Rs 99,000 tractor: Delhi-based SAS Motors Ltd launched Angad, the Rs 99,000 tractor Angad is a 25 HP tractor and is suited to the Indian conditions where the farmers have small land holdings and high paddy cultivation. The manufacturer claims that the tractor consumes 25 per cent less fuel and the maintenance cost is 60 per cent lower compared to other tractors of the same category.. About 75 per cent of the components are being imported from ‘the biggest Chinese tractor making company,’ which would be reduced to about 35 per cent in the next eight months. Angad is built on technologies appropriate for the Indian conditions which have enabled the company to cut prodcution costs significantly. A tremendous amount of value engineering and low-cost mechanisation has brought the costs down.

For years, I was contemplating for a tractor in this price range. Why can’t our manufacturers achieve the target price and go for a scale and quality to make it attractive enough to be the world leader in this industry? I remember Central Mechanical Engineering Institute, Durgapur designed an indigenous tractor that could have been continuously upgraded. India at least can aim at becoming global tractor manufacturing hub to showcase its manufacturing competitiveness.

ICICI Infotech outsmarts TCS, Wipro: ICICI Infotech outsmarted Tata Consultancy Services and Wipro to get the mandate from states for setting up a national tax information exchange system (Tinxsys) to track inter-state transactions and check tax evasion. Tinxsys would enable states to assess the sales tax and other local taxes running into Rs 1,00,000 crore (Rs 1,000 billion).
It’s a historic as 28 states have come together to put in place Tinxsys. The network is for tracking inter-state transactions. It will go a long way to detect if there is any tax evasion. The technology backbone is key to state governments’ vision of improving tax administration, especially when the country switches to the VAT regime from April 2005.
This is certainly a great achievement for the ICICI Infotech deserving a big congratulation. Only through technology can we do away with the corruption.

Rover says working with Tata to make UK offerings ‘attractive’: Putting to rest rumours of an impending rift in the Tata Motors-MG Rover relationship, MG Rover has said that the two companies are now working towards making City Rover a more attractive package, offering better value for money.
Periodical discussions on model upgrades and exploring new opportunities are a part of the original deal. The need to hold discussions at present is driven by poor sales.
City Rover faces stiff competition in the super mini segment from cars such as Fiat Panda, Toyota Yaris, Daihatsu Charade and Skoda Fabia. At pound sterling 6,495-8,895, City Rover is slightly more expensive than Fiat Panda (pound sterling 6,295-8,895). According to the last available reports, Rover sold around 4,800 units of the City in the October 2003-July 2004 period.

MG Rover and Tata Motors can certainly find solutions to the problems. But for Tata Motors it is critical to establish itself as passenger car manufacturer of world class.

- Indra

Category: Uncategorized |