Sustainable mobility

Delegates at ACMAs 57th annual session 2017 copy

The 57th ACMA annual convention stressed on sustainable mobility, and a model that would best suit the Indian needs.

Story by:

Anirudh Raheja

Not out of the purview of the changes and disruptions that are, or have striked the Indian auto industry, the auto components industry, under the aegis of ACMA, in no uncertain terms, expressed its support for sustainable mobility. The stakeholders of the Indian auto components industry, at the 57th annual convention held at Delhi, spoke in favour of a greener tomorrow. The theme of convention, ‘Future of Mobility in India: Challenges and Opportunities for the Auto Component Industry’ aptly reflected upon the opportunities and challenges the industry is enjoying as well as facing. Calling for a need to focus on building the pace to tackle challenges, and to tap opportunities, the ACMA convention saw OEMs and government officials mark their presence two.

In his keynote address, Rattan Kapur, the outgoing president of ACMA, stressed upon the Indian auto components industry to integrate itself into a global supply chain. He mentioned that the industry cannot stay oblivious to changes, and that the need was to prepare for the transformation. “Our hands are full as we graduate from BSIV to BSVI emission norms. The move is about leapfrogging technologies in a very short span of time, and is calling for significant investment and skill development,” opined Kapur. Touching upon the subject of emobility, Kapur averred that the progression to hybrids and fully-electric vehicles will provide an opportunity to acquire technologies. Said Vishvajit Sahay, Joint Secretary, Department of Heavy Industries, Government of India, in his address that the industry needs to be not only technology-ready, it also needs to build capacity. To succeed there is a need to acquire and train people, he said.

Expressing that emobility is inevitable, and will lead to massive transformation, Dr. Abhay Firodia, the newly elected President of SIAM and Chairman, Force Motors, said that the correct way to do it is

to transition gradually.

Dr. Firodia mentioned that the industry needs clarity as both, the OEMs and auto components manufacturers, are able to ride the transformation wave. Stating that new technologies exist and are reasonably mature to be implemented in a matter of few years, Dr. Firodia expressed that the policy environment should lead to the progression, and towards a sustainable road map.

With the Indian auto industry contributing a little over seven per cent of the GDP, two-per cent comes from the auto components industry. Shobana Kamineni, President, CII, in her speech stressed upon smart manufacturing and skill development. R.C. Bhargava, Chairman, Maruti Suzuki India, drew attention to the options that lie in front of the country as it embarks on the journey and electromobility, and how they should be thoroughly evaluated. “India has its own set of challenges. The need is to work together with the government and see what impact the EV policy has on the customers,” he averred. A study conducted by McKinsey for ACMA on the ‘Future of E-mobility’ was also released. It underscores trends like connectivity, shared mobility, autonomous driving and electrification. It also highlights the need of various stakeholders to work in tandem to carve out policies that facilitate local development of technology.

Panel discussion

Jayant Dawar, Co-Chairman and MD, Sandhar Technologies set the tone for the discussion. He expressed that India was on the verge of one of the most consequential disruptions in the history of the auto industry. “There is a need to plug all the ideas, including electric vehicles, shared services, connected vehicles, green fuels, and autonomous vehicles. They should be bunched together, and a picture of how they will shape up transportation should be had,” mentioned Dawar.

Dr. Pawan Goenka, MD, Mahindra & Mahindra, denied that IC engine will die anytime soon. He said, “By 2030, we are poised to make 16 million vehicles. We will still have a market for over 10 million vehicles. There will be EVs, the penetration of which, at the level of 20 to 30 per cent, should be considered as good.” Stressing upon investment in IC engine technology continuing, Dr. Goenka opined that improvements to IC engines will lead to them giving a tough fight to EVs.

Mentioned Ashok Taneja, MD & CEO, Shriram Pistons and Rings, that India is a continent that pretends to be a country. “It is therefore important to have a India specific model, which will suit its affordability equation.” Stating that the success story in electronics hardware is zero, Taneja called upon the need to be prepared for electromobility; to search for the answers, and not panic. Thomas Flack, Chief Purchasing Officer, Tata Motors, opined that electrification may not assume a mass scale until it is adopted by the consumer. “India should not think that it is disconnected from the rest of the world. It is not just about electrification, but is also about shared services. It might take more time for the transition to electrification and cleaner fuels to happen. IC engine consumption will go down, and companies associated with them will feel the effect,” explained Flack. ACMA’s ex-president and managing director of Lucas TVS, Arvind Balaji, expressed that the intensity of consumer gains will dictate the trend. Disruptions have their own benefits and costs, he said. “It will not be good therefore to form an opinion now. The need will be to be flexible, and look at the options. We may actually move quicker than we think. It would all depend on the product portfolio. ‘Design in India’ and ‘Make in India’ are important therefore,” mentioned Balaji.

Vikram Kasbekar, Executive Director, Hero MotorCorp., said that asset utilistion will bring down costs, and drive a change. “While the move to BSVI will call for significant investments, it is difficult to imagine how things will unfold in 2030. The need therefore is to have products that can adapt, and to have equipment that can adapt as well. Manpower too will have to adapt to changes. All this will call for policy consistency. It is a prime factor that will help plan the capex,” averred Kasbekar. Jan O Roehrl, CTO and head of mobility solutions, Bosch India, called for the need to stay focused. He pointed at BSVI as a challenge, and the need to focus on it. Coming to an agreement that India requires an infrastructure that will differ from what is currently prevalent in other countries in the case of electro-mobility, the panelists underlined the need for government to play a major role and create the right supporting infrastructure. They underlined the fact that India has an advantage to adopt a system that best suits its needs. The panelists highlighted the need to adopt new technologies.

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Defining Standards

Q & A

Rattan Kapur,

President, ACMA

Interview by: Anirudh Raheja

Q. What will be the effect of BSIV emission norms on the industry?

A. As far as BSIV emission norms are concerned, I would say that the industry is ready. The problem of fuel availability has already been addressed by the government. Most Indian companies have already adapted to BSIV technologies. BSIV, I feel, is good for India. The industry is ready for it too. The 2020 deadline for BSVI emission norms however seems too optimistic.

Q. Global players are expanding their base in India. What role will the Indian auto components players play?

A. Not only is the Indian market opening up, the world is also increasing its shopping list from India. Over a period of time, India has proved to be a market that has matured to a great extent on the quality aspect. The acceptability of Indian products has been rising even in difficult markets like Japan and Germany. It will be a matter of time that the whole world accepts us. Exports will be an important part of the business plans of most companies. As of date, out of our total exports of USD 13 to 15 billion, nearly 25 per cent is exported to the United States of America.

Q. What led to the publication of ACMA study report?

A. The study report reflects on the growth trajectory of auto aftermarket in the country. As per the study, the Indian aftermarket stands at around USD eight billion, and is expected to surpass USD 13 billion mark by 2020. As per the Indian Government’s Automotive Mission Plan 2026, the set target is to reach USD 32 billion. We are looking at the aftermarket to scale up in the next few years. I think it is becoming a part of everybody’s portfolio. It is also proving to be a de-risking portfolio, and is thus an important market. The aftermarket is here to stay.

Q. The unorganised part of the aftermarket is sizeable. How does ACMA look at it?

A. There are two aspects to it. A big chunk of unorganised market reflects upon an entrepreneurial spirit. As long as these companies produce genuine, safe and good quality products, there should not be an issue. The challenge is when unorganised players get involved in the production of substandard products. This largely happens, and in part because India is a highly price sensitive market. At every price point, you can find a market segment. Unfortunately, India has not mandated the standards of products to be sold in the aftermarket. If standards were mandated, there would be a mechanism in place to check the standards. The products would have to comply to those standards. When supplying to the vehicle industry, component manufacturers have to adhere to the auto industry standards. Nobody will take the risk of making the vehicle unsafe. We have been talking to the government for three years now, to make standards a mandate for the aftermarket. The government is serious. If one looks at the new Motor Vehicle Act, much stress is laid out on safety. We are in dialogue with the government.

Q. Counterfeiting is hurting the auto industry. How successful have you been in curbing it?

A. We did a study five years ago. The counterfeit market was as high as 36 per cent. It has now come down to five per cent. In the earlier study, counterfeiting was used in a broad sense. We have tightened the definition of counterfeiting. Counterfeiting is truly spurious as per the tightend definition, and accounts for five per cent. Consider the earlier 36 per cent, and the rest of the 31 per cent accounts for substandard products. The proportion, when one looks closely, hasn’t changed. There is thus a long way yet to curb substandard and counterfeit products.

Q. You spoke about defining the standards. How does that reflect on the role of ACMA?

A. It is essential to understand that the market is rapidly evolving. Our understanding of the market is also evolving. Earlier, the term counterfeit included substandard products. Those that are available with small retailers in markets like Paharganj and Kashmere Gate. Counterfeit now refers to fake or spurious products strictly. Products that do not comply with the Copyright Act, and with the IP Act. At this juncture, it may be worth mentioning that China is also dumping products into India. Curbing this is possible by mandating standards. It should be made necessary to show proof of compliance to standards at the customs. The raids we conduct to flush out spurious spares are collective raids. There is a committee in ACMA where all the member companies come together. ACMA conducts raids on their behalf. It is paid for by the members. ACMA has been conducting raids for several years now.

Q. What was the effect of demonetisation on the auto components industry?

A. There are some industries that have survived immense pressure. The four wheeler, two wheeler and agricultural equipment sector lost a big chunk of revenue in terms of sales from rural areas. Major transactions there take place in cash. Demonetisation led to buyer shrinkage. In the long term, demonetisation will go a long way in eradicating industry malpractices. Various sellers sell products at cheap prices in cash and disappear. It is difficult to catch them. Demonetisation will make it difficult for such transactions to take place. Trace-ability will rise when they are mandated to raise invoices. It would be much easier to catch these people, and to regulate the market. In many instances, they end up killing the taxation structure. They end up killing the industry too. Demonetisation has been accepted in the market.

Q. What was the effect of demonetisation on the aftermarket?

A. From an aftermarket perspective, the effect of demonetisation was based on the nature of transactions carried out. In the North, cash transactions are over 50 per cent. In the South, they are less than 20 per cent. Depending upon the amount of cash transactions, markets reacted differently. They were affected differently. Improvement in cash flow should improve market sentiments. I don’t think there are any more issues pertaining to market vibrancy. It is back to normal. The government and bankers today know who are doing cash transactions. At ACMA, we are pushing for digital transactions. We organised seminars at (ACMA) Automechanika to promote digital transactions and epayments.

Q. How do you look at the aftermarket in the eastern region of the country?

A. It is a vibrant market, especially from a commercial vehicle point of view. The hilly terrain leads to more wear and tear of vehicles. This has an effect on maintenance. East India market is set to become big with Assam as the focal point for warehousing. All the material from across India will move there before being transported further to various surrounding regions including the export markets of Myanmar and China.

Q. What change will GST bring about?

A. Products travel across various states. Much paperwork is involved in terms of sales tax and excise duty. GST will eradicate this in a big way. We as an industry have been struggling for long to conduct raids. Almost 500 raids are carried out every year at the retail level. It is possible to reach the distribution level but not the manufacturer level. With GST, it will be possible to reach the level of the manufacturer. My only hope is that GST maintains a level of 18 per cent or less. Above 18 per cent, it will hurt the industry, and may lead to counterfeiting and price rise. Once prices go up, the tendency to under cut and under sell increases. Especially, in the absence of legal papers. We have an abatement on Maximum Retail Price (MRP). Tax is paid on MRP. This abatement will stop once GST comes in. It is tax paid on MRP that makes a product expensive. In a price sensitive market like this, where there is a gravitational pull towards products, lacking quality consciousness, the two wheeler market looks the most vulnerable. If the product becomes more expensive, it will have an adverse impact. This will be led by the two wheeler market, and followed by the agricultural equipment market, commercial vehicles, and passenger vehicles.

Q. What are the programs and drives ACMA conducts?

A. ‘Safer drives’ is a big campaign we conduct. During the safety week of the Government of India, we participated for the first time. We held seminars, walkabouts, and campaigns. Even at (ACMA) Automechanika, we had a pavilion for safer drives. We are now consciously pushing people to use safer products. We also held a classroom for mechanics. Mechanics in batches of 30 were trained to use safety products. We are also building a digital catalogue of all aftermarket products. When one needs a product, he or she can send a query on the ACMA website. It will enable us to help them find a genuine product at a genuine price.

Q. Is the Cluster program a part of it?

A. The cluster program is completely different. It is about building competency in manufacturing. It intervenes at the shop floor level to make sure that requisite training happens at all levels to minimise defects. A part of this program concentrates on zero defect. To create awareness for safer and quality products, we constantly conduct road shows, take up kiosks in vibrant automotive hubs, and get company teams to educate people about spurious products. .

Q. What role does ACMA play in connecting suppliers with OEMs, and improve the ecosystem?

A. We try to find out from the OEMs what their requirements are. We talk to them. We consult them for visiting as delegates. We introduce our member suppliers, and help to establish a communication link, including inking of technical pacts. Such activities helps boost the technical capabilities of local manufacturers while understanding the needs of OEMs. We execute such activities for tier 1 suppliers with OEMs, and with tier 1 and tier 2 suppliers. There is a need to handhold them to ensure an improvement of the whole ecosystem. We have already developed a strong base of 80 tier 2 suppliers in Gujarat who are the preferred choice of OEMs.

Q. Does ACMA also engage with potential investors?

A. An ACMA delegation visited US to meet venture capitalists recently. The delegation reached out to companies developing technologies as well. Four members of ACMA have shown interest to engage with the venture capitalists. This is towards investing in new technologies. It is for the companies to find the right path.

Q. What is your view on electromobility from an ACMA stand point?

A. Looking at the issue of pollution, the future lies in electrification of vehicles. There will be need for technologies like quick charge. There is already a talk about setting up charging points, and building the necessary infrastructure. Solutions are being found to overcome challenges.

“My only hope is that GST maintains a level of 18 per cent or less. Above 18 per cent, it will hurt the industry, and may lead to counterfeiting and price rise.”


Counterfeit now refers to fake or spurious products strictly. Products that do not comply with the Copyright Act, and with the IP Act.

Global trends to survive, thrive

Stress was laid on progression to partnering with OEM for product development from being a mere supplier at the 56th Annual Session & National conference hosted by ACMA.

Story & Photos: Bhargav TS

The Indian auto component industry recorded a turnover of Rs.255,600 crore in 2015-16. Exports contributed almost 30 per cent of the Indian auto ancillary industry’s revenue at Rs.70,900 crore. From a long-term perspective, the Automotive Mission Plan (AMP) 2026 has already set ambitious growth aspirations for the ancillary sector with growth in the region of Rs.12,11,500 crore. The AMP has set exports growth ambition to the tune of Rs.462,500 crore, which would roughly amount to 35 to 40 per cent of the overall industry output by 2026. To achieve these goals, the Indian auto ancillary industry, it is clear, will have to align with global trends like electrification and lightweighting. It is clear that the industry players will have to invest in innovation and modern manufacturing practices.

This is what the captains of the Indian ancillary industry underlined at the 56th Annual Session & National Conferencee hosted by Automotive Component Manufacturers Association of India (ACMA) in Delhi recently. The conference reflected upon the changes, challenges and opportunities the industry is foreseeing. With the government’s ‘Make in India’ campaign encourging Indian companies to indulge in local manufacture of high value goods, the auto industry, the captains expressed, have an important role to play. They also drew attention to prospects like ease of doing business, and what key reforms like GST will have to offer. According to ACMA sources, the Indian auto components industry has been focussing on improving quality. There is a need however to be proactive while focusing on holistic qualitative growth. The industry, they said, is investing, working to imbibe culture and develop leadership, which will reflect on commitment and an ability to grow. Sources drew attention to the transformation the global automotive industry is going through with the advent of new technologies and changing regulatory environment. Trends like electrification, connectivity, autonomous driving, advanced material and manufacturing were delved upon at the conference. Focus was also laid on how the automotive industry will transform over the next few years.


The way forward

In order to understand the challenges that lie in front of the Indian auto ancillary industry, and the way forward, ACMA engaged McKinsey & Co. to conduct a study.. The study, ‘Winning with Quality and Innovation’, tabled at the conference, mentioned that the auto component industry, in order to stay competitive, will need to develop in-house design capabilities, harness frugal engineering and create product differentiation through innovation. A move towards product and process innovation, and quality, the study mentioned, will deeply influence growth. It also stressed upon culture being the most critical dimension of quality. Contrary to popular belief, the culture of quality can be created in all organisations regardless of age and size, the study underlined. It highlighted upon four steps to create a quality culture in the organisation. Touching upon the key observations of the study, ACMA sources averred that innovations in the auto components industry have grown quickly and profitably. Innovation historically, they mentioned, have been driven by European suppliers. In the changing global order, the Indian suppliers have found a significant opportunity to innovate, they mentioned. Innovation, said an industry captain on the sidelines of the conference, need not be limited to products and processes, even portfolios and business model make important candidates for innovation. It is they that help to create value, he added.

Quality and technology

Reflecting upon quality and technology, president of ACMA and the joint managing director of Lucas-TVS, Arvind Balaji, expressed that the Indian auto component industry is at a crucial stage where quality and technology will be the key differentiators. To achieve zero defects, the auto components industry will require upgradation of existing facilities and capabilities, he added. He drew attention to the government policy that makes manufacturing more attractive and industry more profitable. India has all the ingredients to be among the leaders of the global automotive industry, mentioned Balaji. “The overall quality levels in the component industry have improved significantly, but there is some more distance to be travelled to meet the global industry levels,” he added. Stressing upon the rapid change the automotive landscape is undergoing globally with integration of digital technologies, and with rising concern for environment and safety, Balaji averred that there is a need for the Indian component industry to move to the next level. With the advent of newer technologies like 3D printing, the digital edge is upon the auto industry, and will lead to unprecedented level of automation. Changes like these will have to be addressed, and will call for significant investment in R&D to create value, expressed an industry figure.

Government support

Emphasising upon government support, union minister for heavy industries and public enterprises, Anant Geete, in his speech mentioned that his government would leave no stone unturned to ensure the auto industry in India grows. He stressed upon the need for the industry to absorb new technology and find frugal ways of working without compromising quality. “New technology is essential to compete at the international level. There is so much more that has to be worked upon. The level of acceptance of new technologies is high in India, it is the utility value that we must focus upon since it is vital to provide global standards of quality to increase exports and make the Indian auto component industry numero uno in the world,” he stated. Geete expressed that the auto-component industry has displayed excellent performance in the last decade. The growth the industry has achieved, has generated tremendous employment opportunities. Stressing upon the Indian auto industry as the primary contributor to manufacturing sector growth, and for ‘Make in India’ programme, Geete averred that his government will help resolve issues troubling the auto industry. and pledge full support. With implementation of GST, industry prospects will improve, he opined.

Union minister for road transport, highways and shipping, Nitin Gadkari, in his speech, assured the ancillary industry of government support. He spoke about the plans to develop internal waterways for transportation to bring down logistic costs. He also spoke about plans for scrapping old vehicles to help make way for new, greener vehicles. “It is essential to bring down logistics costs. To do so, we are trying to connect rivers across India. We are also developing 27 industrial clusters, and are looking at the auto industry to play an important role in it.” In his speech, Rattan Kapur, Vice President of ACMA and CMD of Mark Exhaust Systems, expressed that the industry has to graduate from one that merely ‘builds from print’ to the one that ‘innovates and experiments’. To achieve this, we need to strengthen our relation with the customer, he added. Stressing upon the need to turn co-development partner to OEMs, Kapur stated that there is a need to ‘share risk’ in areas like technology and product development.


Need to scale up

In his keynote address, RC Bhargava, Chairman, Maruti Suzuki India Ltd., emphasised, “The auto component manufacturers need to have a singular focus to scale up their businesses with quality and technology as the bedrock. The industry needs to invest in design and capability, in world class testing and manufacturing facilities, improve profitability of operations in order to become integral with the global supply chain .” Speaking on the theme of ‘Quality and Innovation’, Guenter Butschek, MD & CEO, Tata Motors, said, “The Indian auto industry is going through a very dynamic phase. It is witnessing a dramatic shift in landscape for the auto components industry. Quality and innovation are the cornerstones for success in today’s business environment and at the core of Tata Motors’ new mission and vision, along with a continued focus on R&D investment in design and engineering. We at Tata Motors are looking to streamline our supply chain operations and focus on suppliers with comprehensive capabilities and high performance levels in areas of technical know how, quality, cost, delivery and financial health. We will be rolling out a new supplier capability assessment process with the intention to bring synergies and efficiencies in the whole ecosystem and to create win-win situations for both, Tata Motors and the supplier fraternity.”

Team Spirit

A panel discussion on ‘Winning with Quality and Innovation’ saw eminent speakers from the ancillary industry as well as the government share their views. These included Girish Shankar, Secretary Department of Heavy Industry, Government of India, Rajan Wadhera, President and Chief Executive, Truck & Powertrain Head – Mahindra Research Valley, Mahindra & Mahindra, C V Raman, Executive Director (Engineering), Maruti Suzuki India, Dr. Christian Brenneke, Vice- President – Product Engineering, WABCO Inc., Malo Le Masson, Head – Global Product Planning, Hero MotoCorp, David Keeling, Senior Partner, McKinsey & Company India, and Shivanshu Gupta, Partner, McKinsey & Company. The discussion was moderated by Ashok Taneja, MD and CEO, Shriram Pistons & Rings. Stress was laid on achieving global quality, and an ability to learn best practices to be able to team up with vehicle manufacturers as development partners. Averred CV Raman, that supply chain is critical for smooth functioning. It is they, our partners, that need to be guided in terms of employing best quality practices. To be a global player, they will need to strictly adhere to global quality standards, he added. Wadhera emphasised upon design and engineering as the core parameters to drive the quality culture. Stressing upon the need to engage suppliers from the beginning, he said, at Mahindra we organise supplier capability building programme, which has seen the participation of over 50 suppliers in the last two years. We also conduct Mahindra Supplier Evaluation System, Supply Risk Management and other sessions to help the suppliers to follow best practices, he mentioneds. Malo Le Masson of Hero MotoCorp expressed that in order to meet BS VI emission norms target, vehicle manufacturers need to collaborate with suppliers and focus on R&D. “We have done this earlier, and a good example is the development of Splendor’s start-stop iSmart technology. We are looking at developing technology of global standards at Indian cost. We think it amounts to a good opportunity,” Le Masson stated.

Inputs from Prashant Talreja