Daimler, Perkins target R&D in India

Global automotive players have used India as a sourcing and testing hub but retained R&D activities overseas till now. This scenario is set to change. In the lead is Daimler which is considering shifting its technical centre from China to India to service Indian and global markets. A decision is expected by end-2012. At present, Daimler has a small technical centre in China but its activities have been bogged down by intellectual property rights (IPR) related issues.

Hence, its decision to consider India as a base and to invest additionally on a larger R&D centre. In China, Daimler develops engines locally for passenger cars for indigenous OEMs with whom it has partnerships.

According to industry sources, when it is an issue related to IPR and sensitive information, OEMs prefer to shift their R&D from China to India. However, inadequate infrastructure in India like electricity and good roads may well make Daimler evaluate a second option in some South East Asian country. For instance, Japanese OEMs have most of their technical centres in countries like Vietnam and Thailand due to availability of reliable infrastructure and qualified manpower. In India, skilled manpower, low operating costs and IPR are positives but infrastructure remains a deterrent.

In fact, Maruti Suzuki, though a major player in India, has run its R&D activity from Japan both for India and world markets. While OEs buy testing equipment for testing in India, R&D has been another ballgame. Similarly, Honda, Yamaha, Daimler, Ford and GM have till now only undertaken testing and product localisation in India, while R&D was taken up abroad.

Apart from Daimler, another automotive player keen to set up an R&D facility in India is engine manufacturer Perkins. It hopes to finalise plans within a few months with the technical centre to be established in this calendar year.

Perkins is believed to be planning large engines for India and global markets, leveraging the local resources.

An investment of Euro 100 million is in the pipeline by Perkins in India besides other large investments of other component makers like engine manufacturer Cummins at Pune. This will help India become a hub for skills and product development as well for manufacturing.

SHOBHA MATHUR