India’s automotive manufacturers are comparing their technology and their operational patterns
Indian automobile manufacturers have made great strides in technology over the past few years. Manufacturers have had access to a lot of technology through joint ventures, organic growth, and technology partnership. However, there has been a significant gap in technology between the west and their Asian counterparts. Many companies have moved their manufacturing facilities to Asia because of the low cost of manufacturing. India has certainly benefited from that. India has been forced to assemble all fully-built vehicles due to the high import duty and SKD kits. SIAM data shows that almost 99% of Indian vehicles are assembled in India. Industry critics have suggested that Indian manufacturers are importing components to India in order to make them available for assembly and sale in India. They can make a profit from technology and manufacturing happening in another country because the component tariff is only 7.5%. This is partially true as India imports approximately $ 14 billion worth of component (ACMA Report) while exporting about $ 10 billion worth. Yes, there is a $ 4 billion difference. It is small when compared to the $ 75 billion industry. The manufacturer that imports the majority of the components necessary to assemble the vehicle’s body is a small and niche company.
The industry’s pain point is engine
This pattern ensures that Indian automobile products are competitive in the market. It’s not the same story with engine. Most Indian manufacturers have inferior quality engines compared to European and Japanese producers. This is one area where the Indian industry is heavily dependent on the west. They source engines, collaborate on engine development or form joint ventures to access engines. India is a market where the engines are largely controlled by companies from the developed countries. The entire market depends on engine technology from the developed world to some degree. A lot of money and effort is also spent to adapt these products to Indian requirements. This is where engine consulting firms make a lot of money.
Market strategic need to get rid engine
India is facing serious fuel shortages and engine problems. India should consider removing the engine altogether as the world moves towards the future. The developed world needs performance vehicles, and electric vehicles have limitations to date in this direction. The Indian context will make it easier for electric vehicles to be adopted. I fully understand the challenges and infrastructural requirements that the electric vehicle industry faces. It is not common in all countries. We are the ones who most need it. The West uses hybrid vehicles to transition from regular vehicles to electric vehicles. But if India follows this path, it will make India dependent for 20 more years. India could avoid this trend by directly moving to an electric vehicle. India will reap the benefits of investing in electric infrastructure from the very beginning. India’s current energy push aligns it with future goals. As India’s infrastructure develops and the economy grows, India’s transportation needs will increase at an exponential rate. India must move ahead without the hybrid vehicle phase.