Comparison of Indian and Global Automotive Industry

Comparison of Indian and Global Automotive industryThe United States was the frst major player from 1900 to 1960, after which Japan took its place as the cost-ecient leader! "ost eciency #ein$ the only real means in as mat%re an ind%stry as a%tomo#iles to retain or impro&e market share, $lo#al a%to man%fact%rers ha&e #een so%rcin$ from the de&elopin$ co%ntries! 'ndia and "hina ha&e emer$ed as fa&o%rite destinations for the frst-tier ()*s since late 19+0s! There are only a few dominant 'ndian ()*s, while the n%m#er of ()*s is &ery lar$e in "hina ,1-- car man%fact%rers and 1-0 motorcycle man%fact%rers.! The major ad&anta$e of the 'ndian economy is ed%cated and skilled workforce with knowled$e of )n$lish! (%r disad&anta$es incl%de poor infrastr%ct%re, complicated ta/ str%ct%re, in0e/i#le la#o%r laws, inter-state policy di1erences and inconsistencies! The dri&ers of "hinese economic $rowth are 23', la#o%r prod%cti&ity $rowth, which was 1!4 times hi$her than that in 'ndia in the last decade, and domestic demand! 2iscal press%re is mo%ntin$ on the "hinese $o&ernment, while 'ndia is in a #etter state! 5ased on comparisons of cost composition to pinpoint the areas in which the 'ndian a%to ind%stry is at a disad&anta$e, this st%dy recommends a 67T re$ime, speedy proced%res, imports d%ty c%ts on raw materials, common testin$ anddesi$n facility, la#o%r reforms, %p$radation of desi$n and en$ineerin$ capa#ilities and #rand #%ildin$!(n analy8in$ the implications of the 'ndia-7S)794 2ree Trade 7$reements for the 'ndian a%tomoti&e ind%stry! 7S)79 economies are $lo#ally more inte$rated than 'ndia! The c%rrent si8e of 'ndian and 7S)79 market for a%tomo#iles is more or less the same #%t the 'ndian market has a lar$er $rowth potential than the 7S)79 market d%e to the low le&el of penetration! The la#or cost is low in 'ndia #%t the strin$ent la#or re$%lations erode this ad&anta$e! The le&el of infrastr%ct%re is #etter in 'ndia than 'ndonesia and the :hilippines #%t worse than that in other 7S)79 co%ntries! The fnancial and #ankin$ sector is #etter in 'ndia than in the 7S)79 co%ntries! There is a h%$e e/cess capacity in 7S)79 co%ntries, in comparisonwith that in 'ndia, which will help them to tackle the e/cess demand that mayarise in f%t%re! There is a -0-;0 per cent cost disad&anta$e for 'ndian companies on acco%nt of ta/ation and infrastr%ct%re and 4--0 per cent la#or cost ad&anta$e o&er compara#le 7S)79-mem#er-#ased companies! Similar fndin$s are noted in a st%dy #y the 7%tomoti&e "omponent *an%fact%rers 7ssociation of 'ndia ,7"*7, -00%ita#le arran$ement within themsel&es to ha&e a #alanced trade, with fair le&el of e/ports and imports! The 'ndian a%to ind%stry co%ld $ain from this :T7 with *)="(SU= only if it is ass%red of the #alanced trade, as *)="(SU= co%ntries practice amon$ themsel&es! 'mpact of 2T7 with So%th 7frica on the 'ndian a%tomo#ileind%stry? @e fnd that there are a few policies in So%th 7frica that indirectly s%#sidi8e the a%to ind%stry, %nlike 'ndia, in terms of fnancial $rants! Aence itis s%$$ested that 'ndia co%ld minimi8e losses only if it $oes for incl%sion of certain a%to components, which in&ol&e h%$e lo$istic costs of imports, creatin$ a nat%ral protection ,for e/ample, stampin$s, $lass, seats, plastics and tires. and those in which 'ndia enjoys economies of scale and is cost-competiti&e ,e!$! castin$s and for$in$s. in this 2T7! 'f So%th 7frica is ready to discontin%e the schemes s%ch as *otor 'nd%stry 3e&elopment :ro$ramme ,*'3:., 'ndia co%ld incl%de all a%tomoti&e components in this 2T7! There sho%ld #e a minim%m local content of 60 per cent and the a$reement sho%ld not #e trade #alancin$ as 'ndia will not $ain m%ch in that case!