Ram Venkataramani, the President of the Automotive Component Manufacturers Association of India (ACMA) on the fourth ACMA Automechnika New Delhi aftermarket trade fair, which opened today at Pragati Maidan, enhancing the R&D culture in the supplier community, readying for incoming emission and safety mandates and more.
How does ACMA view this year's ACMA Automechanika in Delhi with respect to specific focus areas?
I feel proud in announcing that this year we have 515 world-leading manufacturers and suppliers from India and abroad, who are showcasing the latest auto components and accessories. The show is spread across 19,500 square metres, with 300 domestic and over 250 international exhibitors from 16 countries with country pavilions from South Korea, Taiwan, China and the UK.
Apart from showcasing the latest and best in technology at the fair, we will also address the need for safer roads and usage of genuine auto parts through ACMA’s Safer Drives and ‘Messe Frankfurt against Copying’ campaigns. These campaigns aim to promote usage and deployment of genuine products as opposed to fake or counterfeits in the replacement market to curb road accident deaths, one of the highest in the world in India.
What is ACMA's outlook on the changes in the aftermarket once BS VI emission norms are implemented next year and new opportunities?
The Indian auto component industry is fully geared up to meet BS VI norms. We don’t see any challenges of implementing BS VI norms in the auto industry, be it for the OEMs or for the aftermarket.
Having said that, since the aftermarket essentially caters to the vehicles already plying on the roads, the aftermarket players will have some more time at hand. However, the technicians and the mechanics will need to be skilled to handle the BS VI products.
While global suppliers invest about 8-10 percent of their turnover into R&D, Indian suppliers re-invest barely one percent. With new emissions and safety norms, India will now be at par with many developed markets. What is ACMA doing to inculcate and nourish the R&D culture?
Most definitely by April 2020 onwards, most of the products that will be manufactured in India from the emissions and safety standpoint will be reflective of the same global standards that are followed in developed markets.
In the context of R&D, yes, India has generally been a build-to-print environment and most of us have been working in that environment. But I agree with you — now is the opportunity to invest more in R&D. I would like to point out a unique trend. A decade ago, it was very difficult for us to look at international talent, or get global talent to look at R&D here. Now (Indian firms) setting up small R&D centres in Europe is beginning to happen increasingly. I would expect that if you look at company balance sheets from now on, you will see that investments in R&D would only increase in the future.
This will happen primarily because the changing regulatory environment, either on the emissions side or safety side, is being looked at as new opportunities. This definitely is something that the local suppliers would want to explore. I believe we would see this happening now going forward.
Is the supplier community geared up to localise all parts required under the incoming emission and safety mandates?
Not as of today but I think definitely the intent will be to localise all of that in the near future. It is not viable to go on importing and assembling here and supplying parts to customers in the long run. I believe that the market will push us towards localisation, which is why the amount of investment in R&D would increase now.
Transport minister Nitin Gadkari, at ACMA's annual summit (last September), very clearly said that 'Make in India' is a priority, imports have to be reduced and exports have to be increased. At present, we are importing about US$ 15 billion and exporting US$ 13.5 billion worth of components. So, as an industry, we are still a net importer. There is a huge effort underway to identify the parts currently being imported. We can achieve localisation either by joint ventures or technical assistance or under the make-in-India program or even via internal R&D efforts. This has to happen for us to become a cost-effective supplier community in India.
Within ACMA, we have carried out a restructuring exercise wherein we are identifying what members want. The focus has been on identifying five pillars which would deliver greater value to the member companies. These five pillars include business development, skilling, joint ventures and technical assistance. The latter is expected to drive new technology initiatives and acquisitions.
When you compare India with the TRIAD, you must note that the history of the automotive industry there is over 100 years and they have a very matured relationship between OEMs and suppliers there. This is achieved only after so many decades of working together. On the contrary, the Indian automobile industry’s history begins from the 1980s. Therefore, we are a very young industry and still learning. Nevertheless, the times are changing drastically and calling upon us to really shift gears and focus more on R&D now.
How this, we believe, will work in India is that first all major OEMs will set up their R&D centres here, followed by multinational component suppliers establishing their development centres. Over time, the Indian talent working in these companies will either get acquired by the Indian (component) firms or they will spawn off and set up their own R&D-driven start-ups. This is how the R&D culture evolves.
Given the technological disruptions in industry, how important is it for the large Tier I suppliers to handhold the Tier 2, 3 and even smaller players?
The IC engine will continue to see demand even beyond 2030. That’s a very reassuring aspect for the component industry. Secondly, quality parameters are becoming increasingly important. Incoming norms will bring the India market at par with other developed nations. The message from the OEMs is absolutely clear — it is the Tier 1s' responsibility to pull up the Tier 2 and Tier 3 suppliers up to the level of quality required. What OEMs did for the Tier 1s in the past is what is now expected from the Tier 1s. This will surely bring up the quality practices across the value chain. By 2020, we will be making products of global standards.
This is a huge initiative. Through the ACMA Centre for Technology, we are upgrading skills at a very nominal cost. We are working with many Tier 2 and 3 suppliers to upgrade their manufacturing, quality and new product development practices, so that we are all at the same level.