The Economic Times daily newspaper is available online now.

    Reinventing the wheel: The constant transformation of India’s auto sector

    Synopsis

    Today, sustainable manufacturing has become an important strategic tool for auto companies to differentiate themselves from their competitors, experts believe.

    ET Online
    MSME
    India is a rapidly industrialising economy, with an ever-growing need for a robust transportation network to link its various metros and rural areas. Responsible for 50% of the nation's manufacturing GDP, the Indian auto sector is backed by its strong forward and backward linkages with many critical segments of the economy.

    For long, the Indian automobile industry, buoyed by an expansion in the economy, has been considered to be a key growth driver. The Indian auto sector is a world-renowned force too, with major exports made to not only nations in the subcontinent and the various developing nations, but to the developed markets of the US and Europe. Despite a sluggish market environment, in April-March 2019, overall automobile exports grew by 14.50%, reports SIAM.

    On the other hand, the auto component industry in India, with a strong positive multiplier effect, is considered to be one of the key components of India’s economic growth. Despite a sluggish domestic demand, the segment's exports grew by 17.1% to $15.16 billion in 2018-19 from $13.50 billion in 2017-18, registering a CAGR of 11 % over a period of six-year, states ACMA. This healthy performance is certainly a testimony of the sector’s growing recognition globally, highlighting that the segment does meet the stringent global norms and standards.

    It’s different:India is today the fourth largest automotive market in the world and the players in the manufacturing value-chain reflect the strides it has taken. When the Indian automotive market opened up after liberalization in the early 1990s, the global automakers set base in the country in both two and four wheelers. Slowly and steadily as the localization needs of these OEMs (original equipment manufacturers) grew, a strong auto component manufacturing base started to take shape. The auto component makers had to meet the global standards, which ultimately meant they became competitive on an international stage. The story of the Indian auto sector is not that of large manufacturers, but what smaller players, especially in the component segment have been able to achieve.

    Today, many component makers are Tier 1 supplier to the likes of Bosch, which means parts made in India find it place in cars like Mercedes, Audi, Mazda, Jaguar, and Renault-Nissan. Many are also Tier II and III suppliers to companies like Magna International, Denso, Continental, Hyundai Mobis, and ZF Lenksysteme among others .

    This has meant the sector has been one of the early adopters of technological changes happening across the world. In line with global practices, Indian auto manufacturers, in recent times, have also made rapid strides towards embracing the idea of green and sustainable manufacturing.

    “Green and sustainable manufacturing have become an important strategic tool for companies operating in the automotive industry to differentiate themselves from their competitors. Automobile companies are utilizing various green practices not only for saving cost, but also to create an environmentally conscious brand image to improve their competitiveness in the market,” says Vijay Kalra, Chief of Manufacturing Operations – Automotive Division, Mahindra & Mahindra Ltd.

    It's not just that Indian players have been leveraging on sustainable manufacturing to create a distinct identity alone, the concept has also been useful to the industry in helping it minimise costs.

    Vinnie Mehta, Director General, Automotive Component Manufacturers Association of India (ACMA) is of the view that presently the Indian automobile industry is focussed on sustainability, not only just on management principles like quality cost delivery (QCD), but also in ensuring that the industry follows sound environmental best practices and focuses on resource efficiency. This includes all forms of resources - whether its manpower, electricity, water or environment.

    “As an industry body, we have been advocating this all along through what we call our cluster programmes. Till date, ACMA must have made interventions in more than 1000 plus auto component manufacturing plants across the country. Our cluster programmes focus is not only on improving productivity and quality, but there is a lot of attention is paid on the safety aspect and resource optimisation,” reveals Mehta.

    Defect effect
    Currently, across the auto sector, companies are gradually relying on renewable sources of energy in their production process. This includes the installation of solar panels at manufacturing facilities, wind energy and use of biogas as an alternative to LPG, etc.

    acma innovation cultureET Online
    Source- ACMA

    Further, a majority of auto players are now trying various innovative ways to control their environmental impact through eco-friendly designs such as light-weighting, fuel-efficient systems, emission, eco-friendly materials for car components, safety and vehicle life cycle assessment strategy, says Kalra of Mahindra.“I think considerable progress has been made by auto OEMs so far and we can see noticeable speed and momentum across the auto sector. Along with green buildings, green supply chains, reverse logistics, auto players are also leveraging industry 4.0 concepts for creating efficient production systems,” he adds. Mahindra, as a group, has committed to be carbon neutral by 2040.

    It is here that a Government of India initiative is also playing an important part. Mehta of ACMA states that the industry body runs a cluster programme on Zero Defect Zero Effect (ZDZE), a flagship programme of the MSME Ministry that focuses on creating proper awareness in MSMEs about producing defect-free goods and motivating them for an assessment of their enterprise in terms of this concept.

    Post turning ZDZE compliant, MSMEs can not only reduce wastages substantially, but can increase productivity, expand their market as Indian Offset Partners (IOP), become vendors to Central Public Sector Undertakings(CPSUs), have more Intellectual Property Rights (IPRs), thereby developing new products and processes etc, the MSME ministry (GoI) believes. The auto sector has been one of the most ardent adopters, which means that whatever the industry produces, turns out to be defect-free.

    “We believe, ZDZE is a very integral concept of sustainable manufacturing approach since if you produce a defective item, it ultimately adds to your scraps, requiring further recycling,” emphasizes Mehta. The solution thus is to nip the issue in the bud, which is a focus on producing defect-free auto components, right from the initial manufacturing stage.

    Fueling on
    Perhaps, the biggest change for the industry is the shift to BS VI emission norms. The Society of Indian Automobile Manufacturers (SIAM), DG, Vishnu Mathur says that the area of emission and environmental sustainability is extremely high on the industry’s agenda. According to him, to reduce vehicular pollution, the industry has rapidly moved up the ladder of emission norms since the year 2001, when it first implemented the Bharat Stage II emission norms. In a short span of 10 years, the industry had graduated to BS-IV emission norms by 2010 in cities where BS-IV fuel was available. As the supply of BS-IV fuel was extended to other parts of the country, the industry started supplying BS-IV compliant vehicles in those areas and then covering the entire country by 2017 as per the fuel supply deadline.

    “In its efforts to further improve its environmental sustainability, the industry also willingly accepted the challenge of leapfrogging the BS-V norms and going directly to the BS-VI emission norms within a short period of three years by April 2020, a feat that has never been attempted by any other country before.” Mathur says, adding that the automotive industry is highly conscious of its social responsibilities and is well poised to retain its leadership position in “building the nation, responsibly”.
    SIDBI MSME Conclave 2024 |Register Now.
    ...more
    The Economic Times

    Stories you might be interested in