Fantastic opportunity to broadbase growth

Autocar Pro News DeskBy Autocar Pro News Desk calendar 27 Jul 2007 Views icon2298 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Fantastic opportunity to broadbase growth
Maharashtra is indeed fortunate in having greater transparency in its dealings. It is also blessed in the sense that the educational level of the population here is fairly good. Well-qualified outsiders, who have settled down here, have also contributed greatly towards creating a good talent pool in the state. A series of governments with stable industrial policies have made Maharashtra an industrialised, progressive stare and I believe this will continue to be the same in the coming years as well.

Let us also not forget that Mumbai is the financial capital of the country and its port is the largest and busiest in the country. This is significant when, today, exports and imports for the backbone of a liberalised economy. So Maharashtra has been fortunate in that sense. This rapid industrialisation has also become its bane. Basic infrastructure development – be it power, roads and education – has not kept up with the rapidly evolving needs of the industry. The power situation, particularly, is very alarming. My fear is that this growth will slow down unless someone tackles this on a war-footing, keeping politics aside.

Also the cost of growth for individual companies will be higher because the cost of generating one’s own power is a very costly affair. And it is not the right thing to do, anyway. Large-scale power projects are more efficient and cheaper ways of generating electricity than individual, small-scale captive power units.


Having said that, all major OEMs which will give an impetus to the automotive growth of India are setting up base in Maharashtra. It is fair to assume that they gave due consideration to other parts of the country before deciding on this state. This is a fantastic opportunity for Maharashtra to broadbase growth. It is a well established fact that the auto industry has been the hub of rapid economic growth worldwide. And having already established a significantly huge automotive industry, there is no way that Maharashtra as a state cannot grow and prosper even further.

What is needed is political pragmatism which must ensure that the sector is provided the right infrastructural framework within which it can do its job. I would advocate that no time is lost in pandering to petty squabbles among the bureaucracy and politicians. I would also like more attention being paid to establishing a proper protocol in assimilating the landowners into the mainstream. This is critical because land is becoming a major issue thanks to the focus on SEZs.


Going forward, I would think that alongside power and road, the availability of land at a reasonable cost will also decide how rapidly the auto sector grows in Maharashtra. The OEMs and big Tier-1 suppliers may be able to factor in the high cost of land but the ancillaries and SMEs may find this a hindrance to expansion and growth. And this growth is inevitable because a component supplier to a global OEM in India automatically qualifies to become a supplier to that OEM anywhere in the world. The high cost of acquiring land could well blunt the cost advantage to an extent, and affect growth prospect. In the light of what is happening with SEZs, land is an issue that needs to be addressed in ways that is acceptable to all parties.

##### I believe that thinking global must become ingrained in the DNA of component manufacturers, and they will have to factor in global opportunities as they decide on their manufacturing capacities. The fact is that quality is a given and deals are made or broken on factors like cost and timely delivery. It is easier to respond to the demand coming out of Stuttgart or Brazil when basic infrastructure like power, roads, ports and land is in place. And as the monopolistic provider of infrastructure, it is the government’s responsibility to ensure that all industry, and not just the automotive sector, can take advantage of global demands in a timely manner. Good infrastructure facilitates the trickle down in economic growth down to the last layer.

Even while admitting that the state is already overburdened with debt, do you for a moment doubt that industry and the people will not support the government’s decision to go in for additional loans from overseas lenders provided all of that money is invested in infrastructure development? Do you think industry and the people will protest additional toll if travel time between the various industrial centres and the ports is halved? Look what has happened to the road transport between Pune and Mumbai after the expressway was commissioned.


Travel time has come down from seven hours to three hours, and people happily pay the toll. Should this not be a good model for the government to operate on? Who will argue that the golden quadrilateral has not speeded up economic activity between cities and the hinterland? I fail to understand why the state government does not borrow from overseas agencies to fund infrastructure. I think this is perfectly justified and will get the support of the industry provided the money is spent properly without leakage.

Why this has not happened baffles me. I can only say that perhaps the political parties that have governed Maharashtra over the years have been busy furthering their own narrow political agendas rather than concentrate on the all-round development of the state. Having talked about power, roads and land, it would be a travesty if attention was not paid to upgrading the basic and technical skills in colleges, universities and technical institutes. Technical education has been crying for attention for the past several years. The perspective from an industry point of view is this: In order to increase capacity, we can air-freight machinery and speed up the transit process.


While this is happening we can get people trained for using the machine, and we can even install the machine in very short time. But tell me, can education be similarly crammed into a short period of time? There are no shortcuts or crash courses which can produce well-qualified technical people. Education is the basis for a good future, and one needs to invest time and money on this. It might be a little late, but providing good quality education in health, engineering, bio-technology, information technology or whatever must become a priority area.

I think the future holds great opportunities for the upgradation of technology in small scale industries. They will learn to gallop with modern machines and techniques. Within the next few years, the Pune belt will end up manufacturing close to a million passenger cars and commercial vehicles a year. The true economic benefit of this, both to the automotive sector and to the people, will accrue only by the availability of good infrastructure. This will ensure that Maharashtra continues to be the ‘boom state’.

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