Automotive Components Manufacturers Association (ACMA) President Sunjay Kapur speaks to THE WEEK on the current status of India’s automobile industry and the transformation we can expect in the coming days. Excerpts:
How is the Indian automobile industry, OEMs as well as component manufacturers faring vis-a-vis recovery after the pandemic?
The components sector has crossed pandemic levels and is at $65 billion this year, may even cross that. We have seen growth in passenger cars. Commercial vehicles, some stabilisation in two-wheelers and a lot of growth in electrification — industry has almost reached a million vehicles in electrification, predominantly in two-wheelers and three-wheelers and very marginally in the passenger cars segment; 6-8 per cent growth in exports. A lot of positives.
A lot of disruptive technologies are coming in, whether in software, hardware, artificial intelligence, autonomous (vehicles), electrification all that is playing out... lot of growth opportunities. I feel that supply chain issues are easing out. The China plus one strategy is helping us. As long as we continue to invest in R&D, it will continue to help us.
Is the industry prepared for this change?
The local industry is well prepared for the (change). The executive committee of ACMA, which is a good representation of the auto components industry, did a survey one year ago; 60 per cent were already prepared for it and 40 per cent said they would be (ready) in a year or a year-and-half time. So I would say the industry is prepared.
The industry is actively looking at new technologies. I feel with all the disruption that is happening, it is a huge, huge opportunity. Not just in auto components, in infrastructure, also in the space of collaborations and alliances. Because you’re going to see a whole host of different kinds of companies that are going to come in (or) have already come in.
You’ve got software now as part of the auto industry. You’ve got people who are in software, telematics, sensors, people in connected devices and then you’ve got charging infrastructure, batteries… The industry is transforming and with that transformation will come several opportunities, not just for us to individually invest, but to collaborate.
Indian auto manufacturing still remains to be a case of, more of assembling, than original manufacturing.
In Israel, there is so much tech innovation, but they don’t have the market size or manufacturing capability. That again becomes a huge opportunity if India positions itself carefully, and I think companies are going to leverage themselves smartly. I think this generation of auto industry is going to define the future of what’s happening in the automotive industry (world).
In India, and around the world, we are exploring alternative fuels. While electrification is one part of it, it may so be that everything becomes electric. The ICE engine will exist. I don’t know if trucks can go electric, we may have to explore alternate fuels for trucks then.
I think in the Indian context, we are going to explore alternate fuels, because the government has mandated that we explore alternate fuels. Electric is a big theme and how we address 'electric' in terms of charging, safety, in terms of every other regulation will create opportunities in the industry.
All these changes so suddenly can be quite challenging.
The challenges are the opportunities! It’s how you look at it — glass half empty or half full. That’s what we’ve done, as an industry we’ve always evolved. Globally, with everyone going electric, it’s almost like a level playing field (again), so everyone’s got an opportunity! It’s gonna be phenomenal in the days to come!
Can India actually position itself as a manufacturing hub alternative to China?
When you have a situation, requirements emerge; what has clearly emerged is the need for a China plus one. What’s accelerated that is the conflict in Ukraine, for people to sit back and think “What do we do if we run into such a situation? What’s our safe option?” I don’t think companies are going to walk out of China, because the volumes are too huge and the market will continue to grow, China will continue to grow, there’s no doubt about it.
However, is there an opportunity for companies to source outside of China? Yes, that’s where India has an opportunity, and that’s why our exports have grown. Companies are looking at India as a very attractive destination.
(As I said in a speech recently) Five years ago, countries will go through a list of options and come to India last. Today that is not the case. Today, they realise that India is going to become a significant manufacturing hub and technology is going to play a big role in us creating that significant manufacturing hub. China plus one is ours to grab. However, we need to work on bringing the right technologies to our own individual businesses. The government has been very progressive with PLIs, have said “Go ahead and invest in future technologies.”
Tier-1 ICE platforms in Western countries are not going to design and put in capex — that can shift to India. Traditional components in the West that could be considered, maybe for regulatory or climate reasons, can move to India. There are a lot of opportunities, I don’t feel we have to go slow, I think this is our time to grab the opportunity.
Can India hope to be a significant exporter of global auto?
We’ve got to reach a certain standard when it comes to regulation. We are pushing in that direction. When we reach that point, we will start exporting on a big level. Mahindra’s are already exporting tractors. I don’t see why we can’t export manufactured ‘Made in India’ products.
