India’s big domestic market is reason enough for growing interest of MNCs to set up its manufacturing plants in India. Many companies of developed countries are entering in India’s manufacturing sector.
Most of the globally known auto companies including commercial vehicle manufacturers are having its facilities in India.
Toyota Motors’ first coming in India for commercial vehicle didn’t get ahead significantly in 80s. At later date, Toyota Motors set up a plant near Bangalore in India for manufacturing its utility vehicles and compact passenger cars, presently manufacturing Innova and Corrola respectively. It has another manufacturing facility that produces gearboxes that are exported too. Toyota Kirloskar, as part of its expansion plans now to set up another small and compact car manufacturing unit with an investment of about Rs 3,200 crore, creating 2,000 jobs.
GM might have filed bankruptcy in US; GM India is planning another minicar in India that will be priced below ‘Spark’. Other foreign auto manufacturers including Honda and Nissan are setting up or expanding their manufacturing facilities in India to get its own share of Indian market. Interestingly, exports of passenger cars from the country soared 41.64 per cent in May, although domestic sales increased by a meager 2.48 per cent.
Hyundai Motor India is studying the feasibility of setting up a diesel engine plant close to its existing car manufacturing plant near Chennai. Hyundai Motor already has a petrol engine plant which makes Kappa engine at its Sriperumbudur plant near Chennai. The Kappa engine, which is fitted into the i10 car of Hyundai, was developed at a cost of over $400 million. The company expects to sell about 5.8 lakh cars during this calendar year, which is an increase of slightly over 18 per cent over the previous year. Out of 5.8 lakh cars, about 3 lakh cars will be exported including to some European countries.
Being in Noida and seeing Delhi Metro getting into this NCR by August end, I can realize the speed at which Metro is expanding. Its contribution to the improvement of the quality of the life of the city has made other cities to go for Metros in number of cities. And this is the way the related manufacturing gets a boost. Bombardier Transportation set up a manufacturing facility in Gujarat to produce metro train. The first Bombardier Movia train has wheeled out of the Savli facility in a record 18 months. The coaches are cheaper in price than the imported ones. Its design is improved one and incorporates many improved features. It is about 35-40% indigenous. It will supply a total of 81 train sets comprising 424 broad gauge coaches to Delhii Metro Rail Corporation (DMRC) by October 2010 at a cost of about Rs 3,000 crore. I am sure that the plant will soon become the company’s hub even for export market.
The defence production facilities can further enhance the manufacturing sector if it scales its production and also get into export business more commercially. Latest in the news is the Indian Army’s acceptance of DRDO designed and locally built main battle tanks, Arjun. The first armoured regiment with 45 Arjun tanks has taken shape. MBT Arjun has excellent mobility, superior fire power and protection, and is comparable to contemporary world tanks. Some of the significant locally built technologies include Kanchan armour, hydro-pneumatic suspension, armament system, integrated fire detection and suppression system, system engineering and system integration of complex weapon platforms. The tank has been designed and developed by Combat Vehicles Research and Development Establishment India (CVRDE) along with other defence research and development organisations (DRDO) and industrial partners.And the government must take a prudent decision to keep on scaling up and innovating it. It must market and export it to all the countries against global competition. It will mean a lot of outsourcing to many manufacturing vendors.
The government must facilitate Indian PSUs such as HAL, BHEL and BMEL to expand and to become one of the top 10 companies of the world. Automatically, this thrust will give Indian manufacturing a big boost.
But the real employment generation can come only through manufacturing of low tech high volume domestically required commodities in big way in all corners of the country. India will have to compete with other Asian countries, particularly China. How can India get into this mode of manufacturing? India must find a cost effective model and induce the thousands of the new entrepreneurs for this sector.