Anmol Jain, vice chairman of CII Haryana State Council & senior ED, Lumax Industries

Do you think that the automotive sector in the Delhi-NCR region is facing increasing labour problems and will this spread and drive out future investments to other states like Gujarat?
The current crop of labour problems ensuing from Maruti Suzuki India will not necessarily spread across the belt to other firms as most companies are working in a unionised environment. At the micro-level, labour disputes arise from disconnects between management and labour, and most times the management is at fault. In the case of Maruti Suzuki, the labour unrest has external political backing that is not healthy in the long-term for the industry. The Left wants to place external members in the union body of the carmaker. Auto component makers in the region have internal unions that are affiliated to the Haryana Mazdoor Federation. Both labour and managements have to undertake a balancing act to ensure discipline and monetary incentives on the shopfloor. Further, labour laws should be changed. In China, you do not see softer issues in labour laws and the hire and fire policy is prevalent unlike in India. Further, carmakers require a long-term perspective for growth as investments are not restricted to a 3-5 year time frame but are substantial and spread across a longer time period. So you can’t blame labour for investments moving to other states because these issues are prevalent pan India whether or not it is the auto cluster in Chennai or at Pune. Most of the new OEs in the sector have a focused export strategy and would like to locate near the port as international logistics costs are exorbitant. Component suppliers follow the vehicle manufacturers wherever they go. BMW, Nissan and Hyundai have a strong focus on exports and hence, have located at Chennai which has a port. Similarly, MNCs like Ford India, Peugeot Citroen and Maruti Suzuki are planning to establish plants in Gujarat because of a combination of incentives, financial support extended by the state government, general environment of the state economy and their product strategy.

How do you see growth in the NCR region in terms of investments, employment and new business in the future?
Haryana is home to the biggest passenger car maker, Maruti Suzuki India and the country’s leading two-wheeler maker, Hero MotoCorp. As the industry grows further, both companies will continue to add capacity that will generate employment and new business. Maruti Suzuki is already committed to further investments in Haryana at Manesar. Besides, Hero MotoCorp is also expanding its existing plants besides setting up two new plants in the west and south. So production capacities will increase over a three year window.

What are the new initiatives being taken by industry to boost the automotive sector in the region?
The Confederation of Indian Industry (CII) has been working closely with ACMA and been coordinating with government bodies on issues of upliftment of the industry. The National Automotive Testing and R&D Infrastructure Project is a good example of the proactive initiatives of the government for the automotive industry, the Automotive Skills Development Council has been promoted by the auto industry with the approval of the government and is being funded by the National Skill Development Corporation and the union ministry of heavy industry. The speed of implementation of the projects is under discussion with government authorities.

What do you perceive as the challenges in this region and how are they being addressed?
The challenges are not specific to this region but are common across the country. Manpower and labour reforms are required uniformly. Good skilled manpower is drying up; while people are plentiful, talent is all skewed up. The IT industry has picked out the best talent, being a flamboyant industry. The automotive sector gets the next level of workers. The gap between demand and supply of skilled workers affects the pricing aspect of workers. India is among the costliest countries in terms of power. Besides, road infrastructure is not adequately developed while commodity prices have been skyrocketing since the last couple of years. OEs have been trying to de-risk themselves through larger levels of localisation. Also, the duty structure on imports of auto components needs to be looked into especially with continued volatility of currency. At present, the auto component industry is a huge importer of finished goods and raw materials. This dependence on imports needs to be reduced.