Thursday, Jun 19, 2003
Thursday, Jun 19, 2003 |
| Business | ||||
|
News:
Front Page |
National |
Southern States |
Other States |
International |
Opinion |
Business |
Sport |
Miscellaneous |
Advts: Classifieds | Employment | Obituary | Business
By Our Special Correspondent
Are volumes relevant for the growth of the Indian passenger car industry? Does the industry's future depend on economic growth or is the industry to be positioned and enabled to be an instrument of achieving GDP growth? These are some of the questions that several leaders of the passenger car industry in the country tried to tackle in a panel discussion (organised here last week by the television channel CNBC), where the consensus seemed to be on the need for policy changes as also volumes to drive the industry. Suresh Krishna (Sundram Fasteners-TVS group) contended that component suppliers were faced with the problem of low volumes because of too many models being produced in a market with an aggregate demand of no more than six lakh cars a year. With pressure on prices too for components, the suppliers were not even able to recover investments in new equipment and technology. His advice to the components industry was to achieve volumes by supplying to the global market, by developing quality products, till the domestic car industry achieved volumes. B. V. R. Subbu (Hyundai Motors India) felt that the single-source system for component procurement and consolidation of vendors, practised by his company, gave volumes to suppliers. Vendors should look for better margins mainly in high-end components. Suppliers should be told in advance about how much order they would get and at what price, so that they could achieve the required efficiencies in production. Venu Srinivasan (TVS Motor India) felt that Indian component prices were lower than world prices, though they were comparable in quality. He said the industry should rely on thin margins and high volumes — a lesson that the recent history of the two-wheeler industry in the country had taught. T. K. Balaji (Sundaram Clayton-TVS group) said six lakh domestic demand catered to by ten manufacturers of cars meant that volume was truly a problem. V. Sumantran (Telco) said the concept of a $2,000 car was a worthy challenge and his company would certainly like to have a crack at it. "A growing population and growing aspiration for transportation" would ensure that there would be enough demand for an affordable car. But cooperative effort of the industry would be needed to achieve the objective. (South) Korea and Japan, and earlier Italy and Germany, had built a strong automobile industry by encouraging production of cars and not by graduating from components to cars, he pointed out. Those who had described Telco's Rs. 1,700-crore investment in developing its own vehicle as a `foolish' venture had been belied, he said, adding that `self-confidence' as a nation was important. David Friedman (Ford Motor India) felt that volumes required for viable small car production were doubtful in the present conditions in India. How to raise volumes, and what is the role of public policy in the development of the automobile (passenger car) industry? According to Mr. Balaji, leapfrogging in safety and emission technologies, with adequate notice given in advance, would be a more economic proposition than the graduated raising of standards now adopted by the country which was proving costly to the industry. "The country should take a lesson from the telephone sector and avoid the following the American example" in prescribing technological standards. (Domestic) taxation of cars was also a crucial issue relevant to volumes, considering that the domestic market was cost-driven. As for R & D, both very high and very low tariff worked against domestic R & D — the former by inducing complacency through excessive protection and the latter by discouraging investment and risk in product development.
Printer friendly
page
News:
Front Page |
National |
Southern States |
Other States |
International |
Opinion |
Business |
Sport |
Miscellaneous |
|
|
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | Home |
Copyright © 2003, The
Hindu. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu
|
