India is gradually attracting the MNCs for setting up their manufacturing facilities in India. The world today is convinced of India’s as a significant big market for increasingly aspiring middle class that is growing fast in number. It will be interesting to look into some of the announcements regarding the manufacturing sector.
General Motors India recently announced a green-field car project in Maharashtra, and is now planning to set up an engine and gearbox (power trains) manufacturing plant in the country, most likely to cater to the small range of diesel engines (between 1.2 – 2.0 litre). A plant of high-volume production capacity catering to power trains for the largest segments (small car and mid-size) present in India would infuse an investment in the region of $223-335 million (Rs 1,000 – 1,500 crore). Even as the plant fits into the indigenisation strategies of the company, it could also meet the growing demand for low-end petrol and diesel engines in the global arena. As per the MD, GM India, the reasons for choosing Talegaon, Maharashtra, for the green-field car project, was its proximity to the port, keeping exports in mind. “We shall first cater to the domestic demand (phase 1) and then look at exports in phase 2 after servicing local demand.” GM is not ruling out the possibility of making the country a global hub for small cars too, ” though that is not our primary focus as of now”.
Japan’s second largest automaker Nissan Motor plans to invest some USD 840 million in construction of auto factories in India. Nissan is considering two or three coastal cities in western and southern India as possible locations and plans to negotiate with local governments before making a decision, which could come as early as this month, the Nikkei business daily said. Nissan may join the M&M joint venture with Renault that is already bringing out ‘Logan’ this year itself.
India is waking up to a hardware-manufacturing boom. Over the last 18 months, investments worth $18 billion (around Rs 80,000 crore) have been committed by major global players in the electronics, IT and telecom sector (hardware manufacturing or chip design or research and development or developing software products) in the country. Dayanidhi Maran, Union minister of communications and information technology expects a fresh commitment of about $2 billion over one year in telecom manufacturing alone. By 2010, the government has targeted to attract investments of about $20 billion.
Setco Automotive has acquired a manufacturing facility in the US of Haldex Brake Products Corporation for $4.9 million (over Rs 22 crore). Setco Managing Director Harish Sheth said the acquisition was in line with the company’s plan to expand operations in 30 countries in three years. At present, Setco has presence in 14 countries. And Setco is not the only many SMEs are also trying to get into organic growth by acquisitions to expand their market. Rico is planning to acquire a Thai and a Turkish auto-parts maker. Orient Craft bought a failing Levi’s plant in Spain for $15 million, dismantled it and reassembled it at its Gurgaon plant. Everest Kanto already has a cylinder plant in Dubai and is building a $50 million plant in China. Iran and Pakistan, two of its best customers, are pestering the company to build factories in their countries.
NRI Lord Swaraj Paul owned Caparo group plans for investing over 1000 crore in phases at its consolidated engineering complex, near Chennai, mainly targeting cars and trucks as customers, along with an a knowledge based R & D centre at Sriperambadur near Chennai. German auto component major, Bosch has also proposed invest Rs 900 crore in its Indian subsidiaries in two years and bulk of which will be in Mico. Delphi-TVS, disel fuel injection supplier, is setting up a common rail sysem facility near Chennai with an investment of Rs 350 crore. Apollo Tyre is investing Rs 300 crore on a radial tyre project near Chennai. Other players like , Visteon and ZF also have big investment plans on hand.
DaimlerChrysler, the world’s second-largest luxury carmaker, plans to set up a new factory in India to assemble cars. DaimlerChrysler will sign an agreement with the Maharashtra government tomorrow.
The stories above provide only the glimpses of the happenings in some industries in manufacturing sectors. However, the sector is to go many miles, and potentials are huge. Food processing, leather, textiles and apparel, gems and jewellery must grow to take the top position on global stage with scaling up and improving competitiveness.
Read in Time Asia magazine> India takes on the World
The Drive to Compete
Honda plans Rs 2,000cr 2nd plant in Rajasthan