A key element of future success is an even stronger partnership between industry and government. That’s because India faces hurdles in the areas of transportation infrastructure, product quality, skilled workers, and labor and tax regulations — significant issues that require both public sector and private sector collaboration.
"The Indian government will certainly play an integral role in shaping the automotive industry and its future. Their Automotive Mission Plan could be construed as a step in the right direction as it outlines development goals till 2016, including the role of the government in improving infrastructure, tax and labor law revisions," said Bruce M. Belzowski, assistant research scientist and associate director, University of Michigan Transportation Research Institute, Automotive Analysis Division. "Most of the interviewed industry experts are optimistic about government's support for the growth of the industry."
India’s automotive market: Is the small car India’s destiny?
- Steady economic growth should lead to success in the domestic market, but India must overcome significant challenges to succeed in the global market
- The small car and the low-cost “1 lakh car” (about US$2,500) announced by Tata Group are key growth strategies
- Attracting untapped buyers in India is a matter of understanding them, including the role of “status” in Indian buying patterns
- The impact of infrastructure on both domestic and export markets is significant
- India’s financial system provides an important building block for a developing industry
- Improving dealer performance may confer a competitive brand advantage in the future
India’s production capabilities
- India needs to strengthen its own R&D capability
- The supplier base needs to get stronger
- Costs need to be contained
- Labor skills, especially engineers and senior management, could be an unexpected constraint
Challenges impacting India's automotive industry
- Most Indian automotive executives agree that infrastructure is the most urgent challenge to its industry for roads, ports, and power.
- Combating air quality, oil dependency, and congestion issues should be a coordinated effort between government and industry.
- The Indian government has a crucial role to play to build growth capabilities by streamlining national and state government regulations and interactions between the two.
Road to success"IBM has taken the lead in identifying the challenges of India's automotive industry," said Sanjay Rishi, global automotive industry leader, IBM Global Business Services. "India's automotive market has come a long way in a short period, growing more than 15 percent compounded annually since 2001. Based on the study, we have developed the next steps for them to become successful industry players as well as a key market while maintaining double-digit growth in the future."
Some of the next steps for India are:
- Unlocking India’s market potential and improve product quality, especially in the supplier base
- Building the infrastructure (roads, ports) that will enable the Indian automobile industry to catch fire. Only the government is in a position to do so.
- Focusing on education/training and R&D capability. Both industry and government need to support this effort.