The 60th annual convention of ACMA focused on what the future had to offer for the auto components manufacturers.
Story by Deepti Thore
An atmosphere of worry and some trepidation was apparent as the auto industry executives, government officials and ministers gathered at the 60th ACMA annual convention in Delhi recently. Coinciding with the rising Covid-positive people count, the event focused on what lay ahead for the auto components industry as it battled various disruptions, caused or amplified by the pandemic. With the ‘Shaping the new normal’ theme, the convention began by Deepak Jain, President, ACMA India and, Chairman and Managing Director, Lumax Industries, drawing attention to the ‘Atmanirbhar Bharat’ initiative of the Indian Government. Announcing the launch of ACMA’s mobile application, he mentioned that the year has been a period of much resilience. Pointing at the disruptions, Jain called for the creation of a new paradigm in global quality, manufacturing excellence and sustained competitiveness to truly achieve self-reliance (Atmanirbharta).
Highlighting the auto components industry’s ability to sustain as well as reinvent business strategies, Jain said that the Covid situation has once again underlined the need to work together. Mentioned Kenichi Ayukawa, President, SIAM India, and Managing Director & CEO, Maruti Suzuki, that by working together, the industry would be able to maximise product development and achieve the desired success in terms of sales and localisation too. He stressed on quality and safety while explaining that localisation of components was important, and was the reduction in GST, the announcement of a scrappage policy and policies to help increase exports. On self-reliance, Ayukawa said that this would help attract investments in an atmosphere where businesses were relocating from China.
Moving with the times
Stressing on the need to move with the times, Uday Kotak, Chairman and Managing Director, Kotak Mahindra Group, pointed at the transition underway to electric and other fuel mediums. Highlighting the entire value chain of the automotive sector, he said that smooth working of the auto industry was necessary. Averred Pawan Munjal, Chairman, MD and CEO, Hero Motor Corporation, that it was necessary to achieve self-reliance in terms of engineering, innovation and R&D. Highlighting the need for logistics and infrastructure, Pawan Munjal averred that there was a need for a clear vision and policy towards investment in technology, quality upgradation and digitisation. He said that the government should play its part in facilitating regulatory approvals and in the improvement of logistics and infrastructure. This, he added, would go a long way in uplifting the competitiveness of Indian companies. Pointing at the recent pick-up in sales in the rural and semi-urban markets, Munjal said that this could be attributed to social distancing and limited availability of public transportation. “The preference for personal transportation has had an effect too,” he added.
‘Atmanirbhar Bharat’
Of the opinion that connecting, communicating and collaborating was crucial to build ‘Atmanirbhar Bharat’, Munjal said that to build next generation mobility solutions there is a need to ramp up the R&D, to create indigenous technology solutions and reduce import dependence. Explaining that the auto sector in India accounts for 7.1 per cent of India’s GDP and 39 per cent of the manufacturing sector, he averred that a strong representation of ‘Atmanirbhar Bharat’ vision would help Indian companies to excel in the domestic as well as the export markets. Stating that the Indian auto industry imports 5.4 billion auto components like gearboxes, radiators, axles and steering wheels, of which one fourth the quantity is from China, Munjal remarked that to manufacture such parts locally should not be a problem when one considers the fact that 2.5 crore vehicles are sold every year in India.
Drawing attention to the auto components industry’s dominance by small and medium enterprises that amount to roughly 70 per cent of the total industry volume, Kant called for the need to anticipate disruptions. Expressing that auto part prices will further reduce and the nature of work would change, Munjal said that transition to new technologies was inevitable. Underlining the opportunities in electric vehicle space, he drew attention to 5595 electric buses being sanctioned for 64 cities; the reduction in GST for such vehicles, and exemption from custom duties. Stressing on the need to develop parts for such vehicles locally, Munjal mentioned that the need was to focus on technology and resources and R&D. Referring to long term infrastructure spending, stable and long term regulations, Nitin Gadkari, Union Minister for Road Transport & Highways, and MSMEs, Government of India, informed that the scrappage policy would be soon announced. It would help revive demand, he said.
To collaborate
Stressing on the need to have good roads, Gadkari informed that his ministry was constructing roads worth over 30 kms per day. Informing that 22 Green Expressways were being built, of which seven have already been built, Gadkari called for road safety enhancing technologies. Of the opinion that alternate fuels would reduce crude oil import burden, Gadkari spoke about the pilot project of electric highway with 12 km charging rail to enable charging for electric trucks and buses that are able to run for another 200 kilometers on a single charge. He touched on logistics, digitisation, localisation and the need to uplift MSMEs. Stating the need to foster a collaborative spirit and a commitment to grow and compete with the rest of the world, Piyush Goyal, Union Minister for Commerce and Industry and Railways, Government of India, said that trade promotion, technology upgradation and quality enhancement is crucial for shaping up the industry’s future. He pointed at three-wheelers and tractors enjoying good traction.
Of the opinion that quality improvement will lead to a rise in exports, Goyal said that collaborative approach was inevitable. Mentioned Dr Pawan Goenka, Managing Director, Mahindra & Mahindra, that the use of digital technology would enable productivity enhancement and cost savings. Drawing attention to India’s auto components imports exceeding exports, Dr Goenka called for a need to analyse why a certain part needs to be imported. Stating that the industry and government should work together to increase cost competitiveness, Dr Goenka said that technological innovations should be encouraged and emerging technologies or capacities should be identified. He stressed on the need to build a strong ecosystem in India, which the global market could count on for its needs.
The promising world ahead
While Shivanshu Gupta, Senior Partner, Mckinsey & Company, stressed on the need to optimise product design, Rajan Wadhera, Past President, SIAM and Senior Advisor, Mahindra & Mahindra, spoke about digitisation and strengthening of supply chains at the local level to do away with the dependence on imports. Soumitra Bhattacharya, President & MD, Bosch India, pointed out that the Covid situation has laid bare both opportunities and challenges. Of these, the opportunities should be tapped, he added, and challenges should be overcome. Nikunj Sanghi, Chairman, ASDC and MD, JS Fourwheel Motors, underlined the industry resilience whereas Vipin Sondhi, MD & CEO, Ashok Leyland, highlighted the need to look at three key factors, namely public health, migrant labor and national security. “These factors have enhanced social consciousness and need to be factored in,” he added. Drawing attention to the change in demand for CVs, Sondhi said that their return to growth will reflect the state of the economy.
Arvind Balaji, Past President, ACMA, and Joint MD, Lucas TVS, expressed that a shift from working in a controlled environment to adapting quickly to new ways of working was apparent. It had to be done without compromising quality, he added. Abhimanyu Munjal, Joint Managing Director & CEO, Hero Fincorp, said that the bankers and the funders were becoming cautious due to the economic shift. Throughout the conventional as part of the panel discussions, the thoughts that were clearly highlighted by the auto components industry stakeholders and their clients, the OEMs essentially, were the need to revisit the Automotive Mission Plan(AMP). To increase competitiveness through a comprehensive local approach, to work together to ensure that regulations do not become an impediment in the way of growth and sustenance, to digitise, to enhance operational efficiency and agility, manage inventory smartly, and plan infrastructural changes more carefully.
Given the large number of MSMEs that make up the Indian auto components, a thought that kept cropping up through various discussions during the convention was government support rather than the regulatory sword hanging over the head. A large section of the stakeholders were of the opinion that one should not depend on the government, there were those who felt that the provision of efficient infrastructure as the need of the hour by the government would go a long way to achieve strong relentless growth and an ability to sustain. Stressing on the need to lower GST, an industry leader, on the condition of not revealing his name, said on the sidelines of the convention, that collaboration between the government and industry, involving academia, was extremely important. This, he said, would also help tide over unprecedented challenges and drive innovation. Underlining the sweeping technological change the auto industry is witnessing, and which could only further accelerate post Covid situation diffusing, the industry leader said that the right skill sets were necessary, investment in the right technological direction was necessary, along with the smart use of the country’s young aspiring population.
