ACMA urges government to set up technology fund to support smaller suppliers

“Quality just gives you the ticket to play the game. And technology is what’s going to win the game,” says Arvind Balaji, president, Automotive Component Manufacturers Association (ACMA), to reason why companies should focus on ramping up technology and innovation now more than ever before.

There are companies in India that are ramping up their capabilities in order to be more competitive and tap bigger opportunities in the domestic and overseas markets. At the same time, there are some component suppliers which are unable to afford investment in advanced R&D. For this section of the Indian industry, ACMA is seeking government support. “We are telling the government that you should encourage companies which undertake R&D through whatever incentives you can. Now we have also asked for a technology upgradation fund,” Balaji told Autocar Professional on the sidelines of the Auto Expo held earlier this month in New Delhi. This year’s annual Union Budget could have some provision for encouraging R&D and supporting smaller companies.

The Indian automotive industry is in a “peculiar situation”. On one hand there are a number of players which have excess capacity and on the other, India is one of the few markets expected to grow “dramatically in the next 10 years”. It is crucial, especially for local players, to fill the gaps in terms of quality and technology. For that, investment in R&D has to increase. Last year, less than one percent of the industry’s turnover of Rs 2.34 lakh crore (US$ 38.5 billion) was invested in R&D. 

For the section of the industry which is upgrading its technological prowess, the results are more significant that the industry’s perception, feels Balaji. He says, “In this Expo, what you are seeing is that many companies have become more mature. They have also learnt by working with various companies. So you will see the quality of display and the quality of products is itself a step or two better. But still the perception has to be changed. We felt that the automotive sector has to be projected as a sector that is actively innovating, actively engaging in technology development. Many companies are actually doing it but many people are not aware of it.”

Recent examples like the Renault Kwid and the Maruti Suzuki Baleno underline the growing strength of the Indian vendor base. Even so, there is still a significant headroom for the industry to grow. The ability to consistently deliver better quality and innovative products and solutions will be what will set apart the winners from the rest.