Desma

Feb 04, 2020

We Want To Make ‘Make In India’ Brand Global: Deepak Jain

The Automotive Components Manufacturers Association of India (ACMA) has over 850 members and they contribute more than 85 per cent of the organised sector turnover of the auto component industry. ACMA, the apex body of the auto component industry and the catalyst of its growth and development, is actively involved in trade promotion, technology upgradation, quality enhancement and collection and dissemination of information. The industry has continuous challenges haunting it in different forms. “However, our focus is on making the ‘Make in India’ brand universally acceptable. We still have more steps to take. The critical need is to have manufacturing in India that is stable and competitive, which provides comprehensive quality,” Deepak Jain, President of ACMA, told
T Murrali in an exclusive interview.  Edited excerpts:

Q: About 5 years ago ACMA had a vision to cross USD 100 billion by 2020. But things have changed and now it is only 57 percent of that value. Given the current situation, when do you think the industry can reach this goal?

Jain: This year has been exceptional in terms of the whole slowdown, the longest one in quite some time. If you look at the USD 100 billion target we also have a target of USD 200 billion under AMP. For the mid and long-term there is definitely growth in this industry. No one is denying the fact that the macro fundamentals of the economy and the auto industry will grow. We are going to tie this up with the Prime Minister’s vision of a USD 5 trillion economy where one trillion should come from manufacturing. Of this USD 450 billion should come from the auto industry which today is USD 120 billion including components at USD 57 billion.

So the industry has to grow four-fold. The automotive industry has a lot of potential, currently contributing to 50 percent of the manufacturing GDP. The auto industry by itself does close to 7 percent of GDP and the components about 2.3 percent. If ‘Make in India’ has to happen the auto industry will have to see continuous growth. It is very difficult to really set a time frame. The industry has the potential to grow at 15 percent; if that happens it would take 5-7 years to hit the target.

Q: So you are consciously optimistic?

Jain: As I said, there is no doubt about the potential for the industry to grow. There is an aspiration for India and the automotive industry to be in the top three in all segments.

Q: How has the slowdown impacted the components industry in terms of job losses and diminished business prospects?

Jain: Let me talk specifically about job losses. The law provides flexibility for manufacturers to use temporary staff through various schemes. In this scenario, in an upturn, we increase job potential; however, in a downturn the reverse happens. I feel, more than the job losses, it is the whole potential of growth with regulations coming in so fast that it has escalated the price of the vehicle. Affordability has become an issue with NBFC and finance packages. As a components base we are directly linked with the vehicle manufacturers. What is unique to India is that in every downturn all sections of mobility have shown negative growth.

Q: In a crisis there would also be opportunities?

Jain: Yes, always. The first opportunity is to strengthen ourselves and become more cost competitive. The whole industry works on the principle of catering to customer needs with a very cost competitive mechanism. Opportunities are two: the first is internal; component manufacturers have looked internally on how to become and remain cost competitive. I don’t think we have seen so many organised component players shut shop. The second opportunity is on technology; localisation, partnering with certain people, bringing in technologies relevant to the Indian context. There is also a mix of the MNCs coming into India, local players and the JV partners - a good diversity has happened. The key thing is that this will make the Indian component industry more competitive and robust in the long-term.

Q: The foundry associations in Coimbatore talked to raw material suppliers during the slowdown to get material on helpful terms. Is there a possibility for ACMA to do something similar?

Jain: ACMA has been facilitating these things through certain cluster programmes. We have a raw material committee which tracks this. We have a pillar structure now and every pillar is focused on catering to a specific customer need.

For example, business development, finding more technology partnerships, certain Government policy regulations and also skilling and mentoring. In the skilling and mentoring pillar there are a lot of cluster activities that we do to improve the quality aspect. If you look at it over the mid-term there are certain engagements that we do with OEMs and raw material suppliers to ensure there is transparency of data. We act more as a facilitator and knowledge partner.

Q: There is some level of cartelism going on among OEMs in certain markets today. Do you see this sort of scenario in India? Is ACMA taking any steps to prevent it?

Jain: Very clearly, there is CCI; we would need to evaluate how we address these issues. We have never believed in lobbying; our position has been very clear on this. We would interact with the needs of our customers and members. We believe in prevention by educating our members on the regulatory and policy framework on how they can safeguard themselves from all forms of malpractices.

Q: Everyone talks of making India future-ready. What according to you are the missing links for the industry to be like that?

Jain: We have always said that we are a B2B organisation. The component industry has large localisation competence within India. ACMA’s agenda is not to lose its competitiveness. In this whole issue of embracing future-ready technologies we should not start importing instead of manufacturing. So ACMA always facilitates localisation with diversity. We can give the customers whatever they want – EV, ICE, alternate fuel or CNG components. We represent about 850 members who are very diverse in terms of size, competency, and technology relevance for the future. Our intent is to absorb our customers’ needs to give them affordable components to make global quality within India. That has always been our mantra. 

We have created a Centre of Excellence (CoE) at Sonepat partnering with IIT-Delhi. Almost 70 percent of our members are MSMEs and SMEs who do not have the bandwidth to keep on putting up resources like a design or mechatronics lab or future-ready technologies. ACMA has pooled in resources to create local IP and give benefits to its members so that they could use our labs and be trained in the relevant technologies. We have started one CoE in the NCR and would like to do it across the country based on our members’ needs.

Q: Has India transformed from a low-cost manufacturing base to a cost competitive one?   

Jain: I don’t think it’s anymore a low-cost manufacturing base; in fact, we don’t want to be called low cost. We talk of ‘Make in India’ but what does it stand for as a brand. ACMA would like to position itself as a competitive entity giving global sustainable quality that complies with international regulations. The main point is to localise and keep promoting localisation. At the vehicle level we have almost 95 percent localisation. What would happen if EVs come in? Localisation would reduce. So what we have to ensure is that components import does not hinder the activities of the local market which generates so many employment opportunities. The components industry is responsible for more than 5 million jobs.

Q: Suppliers have started graduating from manufacturing print to joint development. When would your members begin to offer technology in a significant way to global OEMs?

Jain: Our intent is first to focus on the Indian supply chains. India itself offers such a massive potential. Within the supply chain there are many players who are also an integral part of the global OEMs and their partners. The chief question is when the ‘Make in India’ brand would be recognised universally as a very competitive technology provider. I think we still have certain steps to take. The critical need is to have manufacturing in India that is stable and competitive which provides comprehensive quality. Many companies are already doing that in the components space.

Q: There are still gaps in the research being done. What do you think are the pain points in this?

Jain: Unfortunately there are large disruptions and technology trends happening worldwide. But this gives India a chance to leapfrog into the start-up culture. Most of the major developments are happening outside India. However, in the two-wheeler segment we do see the opportunity to go from a laggard to a forward technology player. Everyone in the huge two-wheeler market in India has adopted BS-VI; nowhere else in the world has this been done on such a scale. This is a massive competence for us where the industry would go for import substitution in a big way. This will evolve as we go forward as India does have the engineering talent to be among the top three in the world. I feel we still need to make a little more headway in terms of partnership with academia as well as the industry. ACMA’s CoE is one of the starting points and every company needs to do that. We are very optimistic about the future; just a little concerned with today’s scenario where we should have gone one year ahead but unfortunately have fallen two years behind. So we will have to go through this pain which, nevertheless, gives us an opportunity to further improve our competence.

Q: Is the response from your members encouraging for this kind of initiative like the industry academia partnership?

Jain: Yes, completely. They have always welcomed that; we have already trained over 100 associates and plan to train another 500. Of course, we would have to deep-dive on the specific type of technology to be used.

Q: The transition from BS-IV to VI has given many opportunities to both OEMs and suppliers. What is the crux of this and how do you see it, going forward?

Jain: First and foremost it has given confidence to the whole industry and eco system that we can do it, leapfrogging from one generation to another. It has also shown merit and showcased resilience, removing all doubts that it can be done. It shows the immense strength of the Indian auto industry and reflects on the ability of our engineers. We have to keep looking out for opportunities in localisation because the value-add for traditional components due to the BS-VI migration would increase, which is good for the industry.

The concern obviously is affordability. Have we done it too fast, too soon? Is it relevant for India? The competitiveness factor along with affordability is the key. Unfortunately, we have the financial crisis happening now. Multiple events have happened like GST, demonetisation, NBFC issues, regulatory matters, insurance, etc which have resulted in prices going up and affordability going down. In CVs the new axle loads have come as a surprise to us. We hope that the government will be able to maintain a stable, no-surprise policy for implementing new technologies. We also hope that we can have a technology agnostic approach where we should be able to talk about any technology, including the electric vehicle, which gives energy security and sustainable e-mobility, reducing tail-pipe emissions.

Q: While this gives enough confidence to the industry, is e-mobility giving it sleepless nights?

Jain: I think the government is right to say - promote e-mobility. Our request is please do not promote just e-mobility. Of course the Prime Minister himself has said that ICE and e-mobility can co-exist, co-create and learn from each other. EV is certainly a global trend and it will come into India at its own pace. So let the customers decide. As a components industry we will cater to localisation technologies based on customer needs, be it for CNG, EV, bio-fuels or ICE. Our efforts would be to fully support whatever is good for the ‘Make in India’ programme on localisation which gives business opportunities to the components industry.

Q: What is your vision for the future? How do you want to project the Indian automotive industry to global players?

Jain: First and foremost our duty is to project the right way in India itself. If we don’t do it right here we can’t accomplish it globally. We are here to promote the national interest and agenda. Auto contributes nearly 50 percent to the manufacturing GDP of which components are about 25 percent. We are generating the largest employers, not only direct but for indirect employment also. For example, when we sell a vehicle we contribute indirectly to the logistics, steel industry and other ancillaries. India is No.1 in manufacturing two-wheelers but we don’t publicise it enough; we don’t even get recognised for it. So first of all recognition is required at home. Global supply chains will always go towards cost competitiveness and sustainable quality. These two are the key and if we are able to get volumes, the components industry will stand strong to become a global supply chain value-add partner. We want to be known as a cost competitive, good value-add creator and a global quality deliverer. More importantly, we need to do a lot more work in India itself to showcase the true strength and the true face of the automotive industry. (MT)

NB: Featured Photo is representational

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