India is no more a sourcing destination for only software and BPO, pharmaceuticals, or textiles and leathers. India now also exports automobiles, auto parts, and more importantly components for major aerospace industry such as Airbus and Boeing. Dynamatic Technologies recently exported the first batch of flap track Beams (FTBS), a mechanical component used in the A320.TAL Manufacturing Services, a Tata company makes floor beams for Boeing. The European Aeronautic Defence and Space Company (EADS), the consortium that owns Airbus, set up its India sourcing office in 2007, the first outside Europe. By 2008 EADS had sourced Euro 100 million worth of components from India. By 2020, it is targeting Euro 1 billion. EADS has presently 15 Indian suppliers, including HAL that makes passenger doors for its A320.

India is the largest two-wheeler manufacturer and the fifth largest commercial vehicle manufacturer in the world. India is the number one not only in manufacturing of bicycles but also of motorcycles.

Almost all the major global players in automobiles, be it commercial, passenger cars, have set up the manufacturing facilities in India both to tap the large Indian market as well as for using Indian facilities for exporting, as India masters the technique of frugal manufacturing. The beginning that started with Maruti in 1982 is getting matured. India is becoming hub for manufacturing small cars. Maruti, Hyundai, Tata Motors are already increasing its export even in a recessionary market in developed world. Toyota Kirloskar Motor is planning to make India an export hub for small cars by 2012.Honda and Nissan may follow soon. General Motors and Ford have firmed up the plans to manufacture minicars in India for the developed countries. Should not the credit go to Tata motors Nano that has started coming to the consumers at a rate of about 2000 per month?

But the more interestingly almost all auto manufactures have set up the R&D centres in India to use the India talent for innovations that was proved with the launch of Nano with about 40 odd new patents. I vividly remember my questioning Maruti’s CEOs in many conferences about the reasons for not localizing the transmission gears. The answer used to be the high technologies involved in manufacturing. The same Maruti Suzuki has announced a $310 million investment to set up a research and development unit in India that would eventually serve as a R&D hub for small cars for the company outside Japan. Even all high end manufacturers such as Mercedes, Porshe, and BMW are also in India.

Among the Indian original equipment manufacturers (OEMs), Tata and Mahindra & Mahindra are the leaders and have shown intentions to be global players with important acquisitions, upgraded technologies and superior-designed vehicles. Tata Ace, Indica and Nano, and Mahindra’s Scorpio and now Xylo have drawn the global attention about India’s capability in the products development after painstaking market research about the specific needs of the Indian consumer. Indian manufacturers are taking advantage of the slowdown in developed countries and trying to attract the best brains available there today for the engineering and development work.

‘Frugal Engineering’ has become the hallmark of the Indian automotive industry. The Indian lead in cost-effectiveness and the advantages with a highly-skilled human resource pool to bring down the product development cost have made. Global OEMs now look at benefiting from the India advantage by using India-based design and development centres.

Additionally, the auto components manufacturers have built in competencies to develop, and manufacture for the domestic as well as global OEMs at competitive cost with unmatched speed and assured quality. For example, as reported, in Ford’s small car, the brake system will be from an Indian supplier and the instrument panel comes out of collaboration between an Indian supplier and Ford’s engineering studio in Australia. However, everything is not rosy with many major manufacturers switching over and relying more and more on the Chinese sourcing for cost advantages.

The Indian manufacturing story doesn’t end with the cars and its parts. India will leverage its strength in many areas. One such clear case is that of manufacturing Nokia’s cell phones at its Chennai plant. Interestingly the unique innovations made at these plants are finding worldwide applications.