Though most of the world’s best-known auto manufacturers started operation in India in the last decade, most of them were not very serious about making India a manufacturing base. GM, Ford, Honda, Mercedes set up only assembly facilities, and kept on importing critical components including engines and transmissions, and stampings from its parent plants. None of them thought India fit for the R&D and vehicle development. However, their strategies have undergone a major change in last few years. India is becoming the major manufacturing base and also attracting them to outsource components from India for their global plants. It shows the growing strength of Indian manufacturing capability. The sector with expanded activities is also creating huge employment opportunities.
It is interesting that most of the MNC auto manufacturers in India are setting up the facilities for manufacturing engines and transmissions. Suzuki that didn’t allow even transmission gears to be sourced or manufactured in India has now a huge plant to manufacture the units at Manesar in Haryana. Toyota has set up a plant for transmissions that are exported too.
Ford India is looking to set up an engine manufacturing facility with a capacity of about 2.5 lakh units of both petrol and diesel versions to meet its local requirement and those of its car plants in the Asia-pacific and Africa region. As reported, it would be Ford’s first engine plant with diesel engine production facility outside Europe. Ford India has already announced to invest $500 million about Rs 2000 crore.
Fiat India already manufactures multi-jet diesel engines and transmission in India at its Rs 4000 crore-Ranjangaon plant. Till three years back component sourcing from India for Fiat’s global operations was nil, this year it will cross the 150 million euro mark,
Even VW that started the sales of its cars in India only last year now plans to manufacture engine in India. It would also look at outsourcing engines from India.
Hyundai India is the most visible auto manufacturer that has made India its export hub for small cars. Both Japanese and Korean manufacturers find India a better location for export.
While Tata Motors is on the way to get into high-end cars with acquisition of Jaguar, M&M has readied itself to compete with Rover with Hybrid Scorpio, Asia’s first green vehicle.
Many auto components manufacturers too are trying too to get into India. Italian engine maker VM Motori, in which General Motors holds a 50 per cent stake, is planning to set up a manufacturing plant in the country. While German auto component maker Mann and Hummel is considering to set up a second manufacturing facility in India, US-based auto component maker Allison Transmission is considering to set up a manufacturing facility.
With most of Tier I and II auto vendors in India manufacturing and ensuring the global quality standard using established quality management practices, the sector has tremendous potential. Nano has showcased the capability of Indian manufacturing and will of Indian management. The Tata Nano has succeeded in making global history, not just for Tata Motors, but for the Indian industry and the global auto industry in general. No country in the world has so far been able to produce such a complete modern car at such low cost. The intention of Bajaj Auto to join four-wheeler sector with its own small cars and mini trucks is a welcome sign. With huge reserve fund and aspiration of its young and technocrat MD, Bajaj Auto can grow as the third big Indian auto manufacturer after Tata Motors and M&M.
Can India make the manufacturing of engineering products that can transform every home in many regions as small vendors as national aspirations?
India can compete with China. Auto Expo 2008 showcased it.