The automotive industry in India is facing a phase of the boom with a higher demand for imports, which increases their production cost. If the volume of imports continues to rise in the import bill will rise also and there is a possibility that India will not be able to repay its current level of foreign exchange.
The automobile sector has been growing at its fastest pace in India since the 1990s, as has been noted by several reports. One may surmise that this increase is not going to stop soon. In order to stay competitive in the Indian automotive market, the industry needs to innovate.
India is far ahead of the rest of the world when it comes to automotive technology and design, which make India an ideal destination for launching new products and services. It would be premature to speculate if India will still be a world leader in the future.
Auto manufacturing plants are numerous in India, as well as innovative advanced research and development centers. These sectors have faced a decline in efficiency in the past twenty years and now they need to be revived. New products with advanced designs and enhanced performance, and tools and technologies for energy and water management are needed in order to stay competitive.
Some of the raw material costs in India are high and need to be reduced. In fact one major constraint on automaker production is that raw material costs are more than 50% of total manufacturing cost.
One good way to reduce raw material costs is to utilize the use of reusable components. These components would be transported by truck from various countries that export raw materials to India.
With these recycled components they can greatly reduce the cost of the vehicle’s body shell, making them more competitive. They also can be used to develop new designs and technologies that will allow for further manufacturing and offer more affordable vehicles.
The cost of labor in India has been the biggest problem in the industry. In order to encourage the industry to move to third world countries that are more favorable to their workforce, some countries have adopted restrictions on immigration and labor visas. These restrictions are being challenged in court, as many car manufacturers claim they have been victims of immigration restrictions and retaliated against by leaving the country.
The car industry in India has recently become more politically active. Most of the political parties in India have strong ties to the automobile industry. Many of the workers in these industries are highly trained and work in close collaboration with politicians.
In order to help the industry compete in the global market, India needs to find ways to create jobs and support manufacturing. The government must find a way to balance the demands of foreign investment and the domestic economy.
There is no doubt that the automobile sector in India needs assistance needs to come from the government. An independent review panel is needed to study the state of the automobile industry in India and recommend measures to improve its competitiveness.
As the Chinese learn how to export cars, the Americans learn how to build cars, and the Indians learn how to build batteries, the car industry in India has to learn how to export itself. We need to look at new methods of production and innovation to keep up with the rest of the world.