An ACMA-Autocar Professional industry dialogue sees captains of industry speak on a varied range of subjects that impact the Indian automotive industry: safety and emission norms, CASE megatrend, e-mobility and the growing need for collaboration.
One of the highlights of the Auto Expo - Components Show at Pragati Maidan, was an ACMA-Autocar Professional CEO Roundtable Discussion, on the theme of 'Tackling Disruptions – The Road Ahead' moderated by Autocar Professional's Sumantra Barooah. Key luminaries from the automotive industry including component and OEM manufacturers participated in the hour-long session and discussed and debated the course of action in the light of disruptive technologies.
Scott Mackie, vice-president and general manager, Shaw Development; CV Raman, executive director, Engineering, Maruti Suzuki India; Deepak Jain, president, ACMA and CMD, Lumax Industries; Jayant Davar, founder, co-chairman and managing director, Sandhar Technologies and Abhimanyu Saraf, executive director, Vikas Group represented the manufacturers and the suppliers on the sidelines of the mega parts exhibition in New Delhi.
The panellists discussed upon safety and emission regulations, disruptive trends such as CASE, industry's transition to e-mobility and the dire need for collaborations and strong leadership.
Kicking off the roundtable talk, Deepak Jain talked about the prevailing mood at the Auto Expo this time around and said, "The component industry in India is having a diverse mix of entrepreneurial spirit and corporate approach. The Auto Expo 2020 is seeing a convergence of the electronics, digitisation and the mechanical industry, and there are a lot of start-ups taking part as well. I believe it will be the disruptors who will shape the future of mobility."
Deepak Jain, President ACMA and CMD, Lumax Industries, makes a point.
What the Indian automotive industry has done in terms of moving towards sustainability and cutting down upon emissions with its BS IV to BS VI transition in a landmark three-year timeframe, is being globally recognised as a remarkable achievement. Giving his viewpoints on the same, Abhimanyu Saraf said, "BS IV to BS VI coming in suddenly was a big challenge for the automotive industry and an opportunity as well. The entire industry had to innovate, and an invention happens with a set of failures."
"At Vikas Group, we had to put up emissions and chemical labs and also hire people from Japan, the US and Korea to develop the best possible solutions to meet the stringent norms. Ninety percent of our investments have been in R&D and people because they will drive the change. We are well focused towards the training of our employees and we see enough opportunity in the market. We are going in the right direction, BS VI will open up avenues for us to export to new markets as well," he added.
On the topic of collaborations in these times of rapidly changing industry dynamics, Jayant Davar said, "In India, collaborations happened on account of the government's mandate for any foreign company to have a local tie-up to enter India. Subsequently, when the doors for foreign players were opened completely, most collaborations stopped working. However, India being a low-cost country in terms of manufacturing, many foreign companies feel that it is a smart approach to locally apply technologies on Indian platforms and then taking them global."
"In today's time, it's impossible for any single company to have core competence in any field. I personally believe collaborative working is going to grow in the future and we have to work more and more with each other now," Davar added.
While the disruption is impacting all segments of the industry, given their scale and size, the OEMs aren't aloof from it either. According to Maruti Suzuki's CV Raman, "OEMs are becoming integrators. Now, the business case is changing from retail to a customer or a fleet operator, to leasing to shared mobility providers and ride hailers, and we need to have different kinds of solutions as well. So, the whole ecosystem needs to change."
Citing an example of collaboration at a giant of the size of Maruti Suzuki, Raman added, "When Maruti Suzuki launched the Suzuki Connect OBD-based GPS device, we had to tie up with start-ups and technology players. So, now both suppliers and OEMs are working with start-ups and we are devising new business models and value propositions to first gauge the potential and then move forward."
"When Maruti started 30 years ago, we were all working like a start-up and started making cars and learnt it the hard way. Now, quality and compliance has become a hygiene factor and that has made organisations run in a particular direction, having become risk averse. So, our Mobility and Automobile Innovation Lab (MAIL) initiative is in that direction. Every quarter we evaluate four-five start-ups across marketing, service, retail or design and seed fund them and incubate them," he said.
Raman also touched upon the other side of disruption and pinpointed at the role of the industry as well as academia to go hand-in-hand. "The other thing that is taking place in this disruptive time is the industry-academia collaboration, wherein centre of excellences are being created and the entire industry is leveraging their capabilities. With IoT coming in, we need to work on how to leverage it further and take more steps accordingly."
Looking at collaborations as a growth strategy under disruptive times and uncertainty, Deepak Jain added, "A large part of the supplier community doesn't have developmental capabilities. The need for skilling and understanding how the future technologies are coming in saw ACMA set up a Center of Excellence at IIT Sonepat. We have collaborated with AOTS, ASDC and MAIL to ensure that we do it in the right way and we now plan to expand it to other key automotive hubs across India."
Shaw Development's Scott Mackie said, "OEMs are not trying to conquer the world by themselves but are looking at collaborative opportunities."
Moving towards the subject of e-mobility, Mackie said, "Electric mobility is going to be a great opportunity for component manufacturers to diversify and venture into new areas. Having said that, the infrastructure doesn't support a lot of the radical changes and disruptions not just in India but even in large cities in the US as well. There is a mismatch of sorts between the infrastructure and new propulsion technologies in the mobility space right now. So, we have to deliver perfect solutions to the problems and we will need to develop them collaboratively."
"In markets where diesel still remains inexpensive, it would be extremely difficult for customers to shift away and adopt electric mobility. For instance, a vast majority of the North American routes are devoid of charging infrastructure where EVs can't work at all. While EVs have a case for themselves on the passenger vehicle side, but not so on the CV front," he explained.
Adding his viewpoint, Deepak Jain said, "India is in a unique position where futuristic propulsion technologies as well as ICE can co-exist. If we get a right volume set and stable policy, industry will be ready to invest into the new technologies. We are also talking and looking at collaborations and if I talk about the Components Show, for the first time we have start-ups and innovators coming on one platform with the conventional players."
Jayant Davar added that "Our car parc is still very small and we have a huge potential there and for one, the personal transportation segment will continue to grow in the years to come. It would take at least three-four years by use cases to figure out what technology is exactly suitable for the Indian market."
Raman interjected with, "For the energy security and for carbon footprint to be reduced, there are multiple ways by which this can be achieved. From Maruti's perspective, today, whatever we are talking about, the infrastructure either in CNG or electrics has to grow simultaneously, else it will not happen. Therefore, the need of India has to be articulated well and policies formed in line to that."
Shifting focus on the role of leadership and top management in these dynamic scenarios, Davar said, "Availability of the right person for the right job is one of the most critical aspects of the industry. A leader today needs to make sure that there is value creation for the employee, consumer and society. These three aspects have to be delivered to the entire business."
"The attribute that a leader needs today is to be flexible and change with the times. A lot of people have the machines and the money, but if you have the right people for the right job, you can do anything," added Davar.
Chinese component imports and dependency
With the Indian automotive industry observing Chinese imports contributing a substantial portion of the parts being supplied to OEMs in the country, and with the increasing number of Chinese OEMs also eyeing the Indian PV market, such high dependency on a single source might create problems for the industry in the long-run.
"If we were to be that self-sufficient, we would be doing all the manufacturing in-house. But, when we look at this kind of a disruption of where we are going to need power electronics and energy storage solutions, I really don't think there is capacity today to do this single-handedly. Scaling up is extremely difficult because the technology is going to change over the next four-five years and you don't know if right now is a good time to invest or not," said CV Raman.
"Yes, imports from China have increased and that is the reason why it has been our (ACMA's) suggestion to bring the GST on automotive components down from 28 percent to a rationalised rate of 18 percent across part categories. This would have its merit of bringing locally manufactured genuine parts both at OEM and aftermarket at competitive prices as well," remarked Jain.
"As regards the Coronavirus outbreak, we are looking at a global risk and not just a risk to India. Currently, a majority of the OEMs are assessing the situation and once that is done, we would be in a better position to take a call," said Jain, providing an update on the situation.
"Having said that, there are a few companies who might have a lot of dependency on China and they have already taken mitigation steps. From the component industry's perspective, we are cautious and are watching the situation closely," he added.
The way forward
The panel unanimously agreed upon the fact that the government should adopt a technology-agnostic approach for India's journey towards sustainability in its mobility needs. "BS VI is already cutting down NOx by 80 percent, RDE will improve things further. So, we need to adopt the most suitable solutions given our problems and requirements," said Raman.
Putting out his closing remarks, he added, "Only 15 percent of the people in Indian are mobilised individually and if India has to move to becoming a US$ 5 trillion economy, we have to mobilise the masses."
"This is a tremendous opportunity to undertake collaborations, and entrepreneurship and customer-centricity will be key in enabling a company to remain ahead of the curve given whichever technology comes to the mainstream tomorrow," said Jain.
Davar added, "The auto industry has gone through its own evolution through the years. Each one of us is working towards improvement and maybe there are some things that are coinciding at the moment. But, to my mind, this is one of those transition phases of the century and this will also pass and things will be streamlined."
"When the Indian mythological Gods had to change themselves in every era to solve the diverse problems of the world, so will we find a way to change ourselves. This word of paranoia is always going to be there but we will rise to the occasion," said Saraf on an optimistic note.
Finally, even as India Auto Inc contends with a prolonged slowdown, the lies of which have never been seen before, it is the resilience of the component industry and the enthusiasm of OEMs that will keep it going in 2020 and beyond. "The entrepreneurship spirit of the Indian automotive industry is truly what turns disruptions into opportunities. At the Auto Expo Component Show, we see the convergence of traditional manufacturers getting into electrification and digitisation, said Deepak Jain.
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