India Automobile News

The Auto Policy 2002 and the Automotive Mission Plan 2006-2016 state the government’s intention and outline the action required to make India an automotive hub. A key element of this vision is the small car. While various policy measures are under discussion within the government, the automobile industry has proactively contributed to the realisation of this vision.

Industry has committed and is currently in the process of investing over Rs 70,000 crore in India. Of this nearly 65% of the investments in the passenger vehicles sector is stated to be directed towards producing small cars.

There are four essential prerequisites for being called a small car hub. First the total production of small cars in India should rank amongst the top two in the world. Second, small cars should have a high share of the domestic market.

Third, exports of small cars should account for a significant share of the global market. Fourth, India should be home to the development and use of new technologies and manufacturing processes that would sustain this leadership over time.

There can be no question about meeting the first requirement. Although, the numbers of cars produced in India are small compared to the US, Japan, China and other European countries, India is the third largest producer of small cars after Japan and Brazil. Small cars also account for over 71% of the domestic market.

India would continue to be a predominantly small car market. Given the current projections for the Nano, India could easily become the second largest market for small cars in the world and in time perhaps become the preferred location, thus fulfilling the second condition. Last year 192,745 passenger cars were exported from India.

Importantly, the percentage of small cars exported was higher than the percentage share in production. However, India does not account for a significant share of small car exports, thus currently not meeting the third requirement. This could change.

There have been many developments in the small car space in India. The global premiere of the Hyundai i.10 was in India. It is proposed to make India the primary manufacturing centre for the i.10. Prototypes of other models, both for the Indian and global markets, were showcased at Auto Expo.

Maruti-Suzuki plans to make India the hub for the manufacture and export of the A Star, while Nissan has announced its intention of making India an export base. Bajaj showcased a small car prototype. Fiat, Ford, GM, Honda, Skoda, and Volkswagen also made announcements on small car projects.

While there are no stated plans to export the Nano, this may change if this car gains recognition in overseas markets. These developments would enable small cars, produced in India, to command a respectable share in the global market in time. Targeted policy interventions and support could enhance and accelerate this.

A number of patentable technologies and processes have been used in the development of the Nano. The Nano is also an environmentally-friendly and safe car. Other cars have also drawn upon Indian talent and skills. This nurturing and use of engineering capability in India is the key fourth prerequisite to sustaining the relative competitive position of India as an automotive hub.

Clearly the Nano has revitalised the potential to make India a small car hub. Governments of China and Thailand are taking aggressive steps to support and build their industry. Industry must continue to innovate; there is a need for coordinated action among all stakeholders in India to ensure ‘Made in India’ is a reality in the world.