Apex industry bodies debate competition and need for code of conduct

The Society of Indian Automobile Manufacturers (SIAM) in association with the Competition Commission of India (CCI) and Automotive Component Manufacturers Association of India (ACMA) organised a workshop on competition issues in automotive industry in New Delhi yesterday. The workshop was aimed at proactively engaging with different stakeholders in the automotive sector to come up with feasible and practical solutions.

Highlighting the importance of fair competition in the automotive sector, Kenichi Ayukawa, Vice-President, SIAM and MD & CEO, Maruti Suzuki India, said, “Doing business fairly is always good for the safety of the industry as well as the customers. India is the most competitive market and has immense potential and there is a dire need to have customer-friendly policies and products and the industry should be open to new changes in order to grow further.”

Giving the industry view, Mr Vinod Aggarwal, Treasurer, SIAM and MD & CEO, Volvo Eicher Commercial vehicles thanked CCI for organising such a workshop for the automotive sector. He said, “Competition is the best way to innovate continuously and to ensure that customers get the best product. Thanks to digitisation, customers today make well- researched decisions. The sector is not just taking care of the market and after-market needs but also skilling the workforce, dealers and service stations.”

In his keynote address,  Pravin L Aggarwal, Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises, said, “Genuine parts are slightly high on price, however, they ensure proper safety and performance of the vehicle. Consumers must be encouraged to immediately quit the use of unauthorised and counterfeit parts and adopt genuine ones. To regularise the industry further, we need strict regulations to curb the sale of spurious parts.”

Mooting a code of conduct for India Auto Inc
Addressing the audience at the workshop and shedding light on the nuisances of competition laws,  Ashok Kumar Gupta, Chairperson, CCI said, “With an ever-growing number of domestic and international players, continuous innovations and healthy competition in the market, phenomenal changes are happening in the sector. The best outcome of this event for the automotive Industry can be achieved only through advocacy and by developing a code of conduct.”

Giving details about the growth in the auto component sector, Vinnie Mehta, Director General, ACMA, said, “Auto component Industry is rapidly evolving. With a turnover of US$ 51.5 billion, the sector is growing at 14 percent annually. The key issue in the aftermarkets is the lack of mandated standards and the use of spurious products. To tackle the issue of counterfeiting and creating awareness about the use of safe auto parts, ACMA is creating an E-catalogue for consumers to understand the components in their vehicles better.”

The first session highlighted the major issue of abuse of dominance and was chaired by Ms Payal Malik, Adviser, Competition Commission of India, who stressed that the objective of such a workshop is to get an insight into the issues which negatively affects various ecosystems in the automotive industry. Taking the conversation further Mr Avik Chattopadhyay, Co-Founder, Expereal explained, “Keeping the interest of the customers in mind, it is essential to understand that a passenger vehicle is still considered a luxury vehicle. In this scenario, the customer prioritises the product which allows him/her the lowest cost of ownership, from purchase to maintenance to resale.”

“The automotive industry is accused of making large profits. In our country, the heavy tax structure on automobiles has led to an increase in the cost of ownership. In reality, OEMS and OESs are not making much profit,” said C S Vigneshwar, Honorary Tresurer, FADA India. He further added, “The Indian automotive sector is the highest taxed sector. We are asking for a level playing field, we love competition as it helps us as well as the consumers in getting faster access to quality products and services.”

The panel consisted of many speakers like Ramashanker Pandey, MD, Hella India Lighting., Ms Nisha Kaur Oberoi, Partner, Trilegal; ; Harman Sandhu, Partner, Shardul Amarchand Mangaldas & Co. and ;Vishal Narula, Executive Director (Forensic Services and Anti-Trust Matters), PwC India.

Taking on the menace of spurious parts
The second session entitled ‘Cartel & Leniency’ had ;Jnaneswar Sen, Partner, Maven Partners; S Muralidharan, President, Lucas Indian Service; Manish Raj Singhania, Honorary Secretary, FADA; ;Manas Kumar Chaudhari, Partner, Khaitan & Co; ;M M Sharma, Partner, Vaish Associates Advocates; Manoj Pandey, Advisor, CCI and ;Rajeev Kandpal, CFO, Government E-marketplace as speakers.

Talking about cartelisation in the automotive sector, ;Jnaneswar Sen, Maven Partners said, “Automobile brands in India are evolving over the years. The market is highly competitive with existence of multiple brands and each brands having multiple models. The real challenge for OEMs is to get suppliers at the right place at the right price. In India the concerns are not about cartelisation between OEMs or OESs but the fight is between genuine and spurious spare parts.”

The final session highlighted entitled ‘Vertical restraints’ was moderated by  Rakesh Batra, Partner and Sector Lead Automotive, Ernst & Young and was chaired by Ms Jyoti Jindgar, Adviser, CCI.

Pankaj Narula, Executive Adviser, Maruti Suzuki India & Senior Adviser, Suzuki Motor Corporation, Japan said, “In the automotive industry, the manufacturer is fully responsible for their product from sale to service. The expertise necessary to handle an automobile should match the expectations of all stakeholders, right from the safety of the customers as well as strictly adhering to environmental regulations. Correct tools are needed to make adequate repairs by skilled personnel, a service which again needs to be backed by a trusted warranty.”

The panel also had  Arvind Melagani, General Council, Bosch India, Vinkesh Gulati, Vice President, FADA, Vaibhav Gaggar, Partner, Gaggar & Associates, and Neil Hildreth, Associate Partner, PDS Legal pondered extensively on how vertical restraints can affect customer convenience and market competition.

Concluding the event,  Vishnu Mathur, Director General, SIAM, said, “today we discussed topics that are considered ‘taboos’ in the industry. SIAM has always strived hard to create safer products and better experiences for the customers. SIAM is  proactively making efforts for the betterment of the society like SIAM Members display fuel efficiency of the vehicle at the place of purchase, initiated a voluntary recall process and also in association with ACMA and FADA, SIAM formed a skill development council, Automotive Skills Development Council (ASDC), which is aimed at developing and upgrading automotive skills for higher value addition, thus creating a large pool of skilled manpower in the sector along with other initiatives.

The workshop witnessed large participation of representatives from the government and industry experts who came together to discuss various concerns related to fair competition in the automotive sector and come up with possible solutions in terms of best practices and regularization of the industry standards.