The annual conventions of ACMA and SIAM asserted the automotive industry as an engine of growth for the Indian economy.
Automotive Component Manufacturers Association of India (ACMA), the apex body of the auto component industry in India, hosted its 56thAnnual Session and National Conference on August 30, 2016 which focused on ‘Winning with Quality and Innovation’. The 56th Annual Convention of the Society of Indian Automobile Manufacturers (SIAM) followed the next day with the theme of ‘Building the National, Responsibly’, at the same venue.
ACMA’s Annual Session was addressed by key ministers and eminent leaders from the automotive industry, who included Anant Geete, Union Minister for Heavy Industries & Public Enterprises; Nitin Gadkari, Union Minister for Road Transport & Highways; RC Bhargava, Chairman, Maruti Suzuki India; Guenter Butschek, Chief Executive Officer and Managing Director, Tata Motors; Dr Naushad Forbes, President, CII & Co-Chairman, Forbes Marshall; Vinod K Dasari, President, SIAM and Managing Director, Ashok Leyland; and Arvind Balaji, former President, ACMA and Joint Managing Director, Lucas-TVS; Rattan Kapur, former Vice President and currently elected as new President, ACMA and Chairman & Managing Director, Mark Exhaust Systems Ltd.
During the ACMA convention Geete said, “The auto component industry has displayed excellent performance in the last decade. The growth has generated tremendous employment opportunities for India’s population, of which youth are 55 per cent. Since the automotive industry will be the primary contributor to the growth of manufacturing sector and to the ‘Make in India’ programme, we will help resolve all issues and concerns of the automotive industry by giving our full support. The implementation of GST will further boost the prospects of the industry.”
Gadkari said, “This year the automotive industry had a satisfactory performance, achieving an overall growth of 8 per cent with exports of Rs 70,000 crore. In the coming years, the government’s focus will be to adopt economic policies that are conducive to the growth of the industry and help strengthen exports. Innovation, technology and quality will be the three main pillars for industries’ competitiveness. We have the potential to grow exponentially from the current Rs 4.5 lakh crore to Rs 20 lakh crore in the next 10 years, making us one of the world’s foremost.
Emphasising on the road map for the auto component industry, Balaji expounded, “The Indian auto component industry is at a point of inflection, quality and technology will be the key differentiators for industry’s competitiveness. Globally, the automobile landscape is undergoing a rapid change with the integration of digital and intelligent technologies in vehicles, much higher consideration for environment protection, reduction of fossil fuels, enhancement of safety features and changing user preferences. Additionally, concept of digitisation of the manufacturing sector is fast emerging. Changes such as these and others will have to be addressed by the auto component industry by investing significantly in R&D and creation of new products.” He added, “Further, as OEMs consolidate their platforms as also their supply base, globalisation is an imperative for the component sector, not only for reasons of competitiveness but also for survival.”
Expressing optimism, Kapur expressed his viewpoint, “We as an industry have to graduate from one that merely ‘builds from print’ to one that ‘innovates and experiments’. To achieve this, the component industry needs to strengthen its relation with its customers, i.e the OEMs to become co-development partners. This calls for ‘sharing-risks’ in new areas especially those related to technology and product development.”
During the panel discussions, Bhargava emphasised, “The auto component manufacturers need to have a singular focus to scale up their businesses with quality and technology as the bedrock. The industry needs to invest in design and capability, as also in world class testing and manufacturing facilities, improve profitability of operations in order to become integral to the global supply chains.”
Speaking on the theme of Quality and Innovation, Guenter Butschek, Managing Director and CEO, Tata Motors, said, “The Indian auto industry is going through a very dynamic phase and is witnessing a dramatic shift in landscape for the auto components industry. Quality and Innovation are the cornerstones for success in today’s business environment and at the core of Tata Motors’ new mission and vision, along with a continued focus on R&D investment in design and engineering. We at Tata Motors are looking to streamline our supply chain operations and focus on suppliers with comprehensive capabilities and high performance levels in areas of technical know-how, quality, cost, delivery and financial health. We will be rolling out a new supplier capability assessment process with the intention to bring synergies and efficiencies in the whole ecosystem and create win-win situations for both Tata Motors and the supplier fraternity.”
ACMA’s study conducted by McKinsey & Co themed “Winning with Quality and Innovation” was released by the Union Minister Geete. The study reveals that the auto component industry, in order to stay competitive, will be required to develop capabilities for in-house design, harness frugal engineering and create product differentiation through innovations. A move towards product and process innovation and organisation wide culture of quality and innovation will be integral to this change.
McKinsey’s research report showed that culture is the most critical dimension of quality wherein 30 per cent of quality outcomes are linked to culture. Contrary to popular belief, culture of quality can be created in all organisations regardless of age and size. However, culture shifts are not possible without leadership’s commitment to quality. The research also shows that the auto supplier industry will evolve with the following emerging trends which will benefit the industry:
The 56th Annual Session & National Conference concluded on a high note witnessing over 1,200 participants. Eminent speakers from the industry and government graced the event including Girish Shankar, Secretary, Department of Heavy Industry, Government of India; Rajan Wadhera, President and Chief Executive, Truck & Powertrain, Head – Mahindra Research Valley, Mahindra & Mahindra; CV Raman, Executive Director (Engineering), Maruti Suzuki India; Dr Christian Brenneke, Vice-President – Product Engineering, WABCO Inc; Malo Le Masson, Head – Global Product Planning, Hero MotoCorp; David Keeling, Senior Partner, McKinsey & Company, India; and Shivanshu Gupta, Partner, McKinsey & Company, who dwelled on the steps that component industry requires to take in order to become the preferred suppliers of choice for OEMs, create greater value proposition and transform from being local players to truly global players, thus becoming integral to the global automotive supply chains.
ACMA has adopted ‘Make Quality and Technology in India’ as its theme and the apex industry body’s aim has been to focus on strengthening the Indian component industry’s capabilities for new product development, improving quality standards, evolving technology to meet meeting the evolving emission and safety standards, upgrading people skills to support domestic and global expansion of OEMs, building auto-electronics manufacturing capabilities, embracing digital technology in manufacturing to transform productivity. All of this would also be enabling industry and India to become an attractive destination.
Based on the theme of ‘Building the Nation, Responsibly’, SIAM held its 56th Annual Convention, in which, Union Minister Geete was the chief guest. Addressing the guests, he said: “After the Hon’ble Prime Minister gave the ‘Make in India’ call, the auto industry has played a key role in this programme. The environment is one of the biggest concerns for the sector. We have therefore allocated Rs 14,000 crore for the FAME scheme for promoting hybrid and electric mobility, which will save Rs 60,000 crore fuel, thereby benefitting the environment.”
Reiterating the government’s support to the industry, the minister added, “India is looked upon as the world’s youngest nation because we have the most people of below 35 years. We should use this youth power by giving them jobs. And the auto industry has the biggest scope for providing these jobs. If jobs fall in agriculture, only industry can make good this shortfall.”
While welcoming the gathering during the inaugural session, Dasari said, “We appreciate the support from the minister and the Ministry of Heavy Industries. We also welcome the government’s efforts in passing GST but request that there be no more than two rates for the automotive industry. The Indian automotive industry is facing new challenges in providing sustainable mobility for the masses. We have sought a long-term roadmap on safety, emissions and fuel efficiency norms. In order to make practical and rational regulations, we seek a single ministry, single window for the industry. We would also like to thank the government for accepting SIAM’s suggestion of the fleet modernisation scheme. The industry will be happy to offer further incentives to customers to supplement the government’s incentive for purchase of a new vehicle against a scrapped vehicle.”
John Moavenzadeh, Head of Mobility Industries, World Economic Forum on Global Trends in Mobility, USA said, “We are witnessing the fourth industrial revolution and the shifting automotive game. The fourth industrial revolution is not categorised by one single technology but by diverse technologies. The global auto industry is in the midst of a more profound transformation not seen in the past 100 years. Automotive demand is undergoing a seismic shift between developed and emerging economies. The automotive game is changing from volume to value; from the customer’s focus on the product to the mobility experience; from customer-driven vehicles to software-driven ones. By 2026, the Indian automotive industry will be among the top three in the world in engineering, manufacture and exports of vehicles and components.”
Annual Convention with Session 1 on ‘Sustainable Mobility for Creation of Wealth of Nations’, was preceded by an inaugural session. Speaking on the theme, Butschek said, “As a home ground to the world’s largest youth population, the Indian economy is witnessing an unprecedented advantage compared to other countries. The Indian automobile industry contributes to approximately 40 per cent of the nation’s manufacturing GDP and is surrounded by a cloud of opportunities fostering new generation R&D and innovation. Taking into account challenges such as safety, pollution, unemployment and lack of adequate resources, it is imperative for the leading automobile manufacturers to focus on developing ‘sustainable mobility solutions’ in addition to nurturing skilled engineers and people managers rather technocrats and theory masters. The good news is that new horizons like safety norms, GST and the scrappage policy are unfolding and will give us the opportunity to counter these challenges. The focus should be on building a strong partnership between the industry and the government to ensure we work together towards a long-term regulatory regime for the industry. We need to identify technologies based on global mega trends and regulations and deep dive into the industry to map products in order to be future ready.
In conclusion, he added, “It is for the Indian automobile industry to decide whether they want to be followers or leaders and put India on the global automotive map.”
Dr Wilfried Aulbur, Managing Partner India, Chairman Middle East & Africa, Head Automotive Asia, Roland Berger India, said, “The automotive industry is a significant driver for FDI in India. It also drives process improvements and quality; however, these opportunities are not fully used. We need to stimulate volumes to boost GDP and create more job opportunities. While the government’s support is appreciated, a holistic, long-term policy is required. We believe GST will contribute in the growth of India’s automobile sector.”
In Session 2 on ‘Technology Trends’, Union Minister Nitin Gadkari through a recorded video message welcomed the industry’s support in solving pollution problems and agreeing to move straight to BS-VI from BS-IV and also sought the industry’s support in improving road safety. He said, “The automotive sector is on the road towards growth and success with a turnover of Rs 4,50,000 crore that is generating many jobs. The government is seeking ways to ensure that a large part of the global supply can be exported from India. While pollution is one of the biggest concerns, the industry has been very supportive of our efforts to address this issue. We are attempting to implement a scrapping policy for old vehicles, which will help reduce pollution.”
The minister added, “The promise of GST will be fulfilled in this Parliament session. Five lakh accidents occur annually leading to 2.5 lakh deaths. We need the industry’s support to address the issue of accident spots across the country. In 10 years, we believe India’s automotive sector will be number one in the world and the industry’s support is required to realise this goal.”
Speaking at the conclave, Ariel Sella, Managing Director, Capsula – Smart Mobility, Tel Aviv University said, “In 1908, there was a huge disruption caused by gasoline, with mobility moving from horse carriages to cars. Now in 2016, Smart Mobility is triggering disruptions. Smart Mobility is about applying data and sensing communications in vehicles.”
Addressing the gathering, Dr Robert Stephen Moran, Deputy Head, Office for Low Emission Vehicles, Departments for Transport, Business, Energy & Industrial Strategy, Government of United Kingdom, said: “As we move towards more efficient models, diesel engines have a big role to play in the UK. Here, there are four policy drivers: air quality, energy security, carbon and inward investments. The government will spend more than £600 million between 2015 and 2021 to support uptake and manufacturing of Ultra Low Emission Vehicles and keep the UK on track for all new cars to be effectively zero emission by 2040. But some challenges remain: creating a self-sustaining market not reliant on government support and improving the UK consumers’ offer on charging stations.”
The entire auto sector comprising OEMs and component manufacturers reiterated their commitments to the industry and the nation in unison. Both conventions concluded on a buoyant note duly enrgised by the positive encouragement by the ministers to support this significant industry.