The Delhi auto expo has showcased India’s growing stature in the automobile industry, especially in the small car segment. The signs of growth have been clearly visible for quite some time. A year ago, the Tatas launched the Nano at the same venue in a brilliant display of value engineering and commitment to a time schedule to produce a car at below Rs.1 lakh ($2500). The Delhi fair, which attracted leading automakers globally, seems set to equal such as those held in Frankfurt, Geneva, and Tokyo. Ten new models, including three for the first time in the world, were launched. There are at least two factors that have helped India become an attractive destination for the auto industry worldwide. The first is the growing size of the domestic market. Though the first modern passenger car, Maruti 800, came in the mid-1980s, the country had to wait for another decade and a half before it could truly enter the modern automobile age. Since the early 1990s, the world’s leading automakers like Ford, General Motors, Hyundai, Toyota and Honda, apart from several others, set up manufacturing bases here. The domestic passenger car market has grown rapidly, recording a 250 per cent increase over the past decade. Significantly, exports are also rising — around 13 per cent of the domestic production is sold abroad.
The second factor behind India’s rising stature is its proven manufacturing capability, especially in the small car segment. Foreign car-makers, having discovered local strengths in “frugal engineering and frugal product planning,” are flocking to set up production bases here for feeding their global markets too. Simultaneously, the Tatas and the Mahindras have gone global, and not merely through acquisitions. Clearly the discerning Indian consumer is guiding important decisions in the global auto industry: for instance the shift in global preference for a small car follows the trends in India. The race to produce cheaper cars without compromising on quality and emission standards began in India and it will soon show multiple benefits. The component manufacturers who are now scaling up to meet the demands of the global markets have become quality conscious, with 21 of them winning the prestigious Deming awards. In addition, there have been a number of spin-off benefits for car dealers, car financiers, and insurance companies. It is also a visible symbol of macroeconomic resurgence. Yet for India to become a global hub for small cars, more research and development facilities, including those related to design, should be set up.
