1. LEAN MANUFACTURING
34

2. | www.manufacturingdigital.com
m
f
r
Capturing the potential
OF INDIA’S
AUTO INDUSTRY
Its rapid growth may have stalled, but with a GDP of $1.6 trillion
1
– the ninth largest in the world, India has emerged in recent
years as one of the most interesting economies to watch
Written by: Mark Morley,
M
Director of In
ndustry Marketing
for Manufact
turing, GXS
ndia h been tipped to
has
overta
overtake China as the world’s
larges
largest economic power by
the U National Intelligence
US
Coun
Council.
Automot has emerged as a
Automotive
significant sector in this growth and
India is now ranked as the sixth
largest pro
producer of motor vehicles
in the world the vast majority
world;
of which ar manufactured for
are
domestic use, rather than export.
u
Statistic are one thing, but I
Statistics
really got a sense of the country’s
automotive potential during a GXS
business t in Delhi last year. I was
trip
I
fortunate enough to experience
travel on India’s roads during the
journey from Delhi Airport to my
hotel in the south west of the city
and I was immediately struck by the
sheer number of cars on the roads.
Most of these cars were fairly
small by Western standards, and
there was a preference for twowheeled vehicles, but nevertheless
the quantity of motor vehicles on
the road was striking.
It is also notable that this swell
of motor traffic will inevitably
put significant pressure on local
`
governments to improve the road
MARCH | 2013 |
35

3. India’s auto industry
s t
` infrastructure. Based on what I
saw during my trip, there needs to
be substantial investment in road
infrastructure if the automotive
industry is going to successfully
persuade the population to make
the switch from two and threewheeled vehicles to four.
Domestic vehicle production
levels for 2012 in India were at
3.1 million vehicles. To put that
in context, it’s almost twice the
number of vehicles that were
produced in the UK for the same
year.
The figure in India is expected
to double by 2015, and by 2020
almost 10 million vehicles are
expected to be manufactured in the
country. When you think that the
population is currently 1.2 billion,
this is still a very small percentage
versus the population size.
The 16.5 million two and threewheel vehicles produced in India
during 2012 is expected to triple in
size by 2020; in effect making the
market for two and three vehicles
remain at four times the size of the
car market.
Many Western car manufacturers
have established new plants in
India, purely to serve the domestic
market.
Jaguar Land Rover (JLR) is a
good example of a manufacturer
36
who has established a
n
manufacturing presence in the
ta
region. Now owned by Tata – one
erates,
of India’s largest conglomerates,
nt
JLR has established a plant in Pune
to manufacture the Land Rover
opular
Freelander, a small SUV popular in
the UK.
ponents,
The majority of the components, `
Jaguar Land Rover is
a good example of a
manufacturer who has
established an Indian
presence

4. | www.manufacturingdigital.com
f u n
India is now ranked as the sixth largest
producer of motor vehicles in the world; the
vast majority of which are manufactured for
domestic use”
– Mark Morley, Director of Industry Marketing for Manufacturing, GXS
MARCH | 2013 |
37

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6. | www.manufacturingdigital.com
c r g i
India’s auto industry
` including the body are
y
manufactured at a plant in
hipped
the UK and then shipped
out to JLR’s plant in India
se
for assembly. These are
tely
known as Completely
KD)
Knocked Down (CKD)
i
kits; though over time it
is expected that more
of the components that go into
assembling the Freelander will be
locally sourced.
JLR announced at the end
of January 2013 that it started
production of the Jaguar XF car
at its Pune factory so that it could
sell more v
vehicles into the growing
premium e of the car market.
end
A more r
recent investment
example is Japanese utility
ma
vehicle manufacturer Isuzu
Motors, wh
which announced plans
in January to invest $185 million in
manufac
a manufacturing plant at Sri City,
Andhra Pra
Pradesh.
The new facility is to produce the
MU7 Choiz SUV for the domestic
market, an the company will be
and
the latest t take advantage of
to
‘Autom
the ‘Automotive Corridor’ around
T
Chennai. The area’s two ports
and world famous auto-parts
supply cha has attracted leading
chain
manufactu
manufacturers including Mitsubishi,
R
Ford and Renault-Nissan.
PLAY
Jaguar Land Rover opens its first
factory in India
While India keeps most of the
vehicles it produces for its domestic
market, it is a huge exporter of
automotive components. Most of
the big car manufacturers have
established component sourcing
centres in the country, and
automotive manufacturing hubs
have been established to the North,
South, East and West.
One of the most attractive things
about India for overseas investors
is that it now has the world’s
second largest pool of certified
professionals, and the highest
number of qualified engineers.
This means that foreign
manufacturers can invest in the
country safe in the knowledge
that they will be able to secure
appropriate resources – something
many other emerging markets
cannot match. India’s huge and
`
highly skilled workforce gives it
MARCH | 2013 |
39

7. India’s auto industry
n
India’s huge
and highly skilled
workforce gives it a
major advantage”
– Mark Morley
` a major advantage, but the key
to achieving its potential may lie
in mastering lean manufacturing
strategy.
The influx of new car
manufacturers in India has led
to new supplier parks being
established close to car production
plants. The close proximity of these
suppliers to their customers helps
to shorten the length of supply
chains and hence reduce overall
logistics costs.
This helps to foster lean
manufacturing techniques,
especially when trying to implement
seamless just-in-time production
systems. The lean approach will
also allow the country to counter the
impact of rising wages and costs
to improve the bottom line for both
domestic and foreign investors.
Looking ahead, the next big
challenge for the country will be
greater adoption of technology
to enhance its supply chains. In
40
India has a large number
of qualified engineers
PLAY
particular there is hardly any use
of EDI technology across the
component supply industry, except
with some of the Western suppliers
such as Bosch and Continental
that have brought their own EDI
standards and tools with them.
Electronic Data Interchange

8. | www.manufacturingdigital.com
a f u
delivers a f
fast and effective way
to transfer essential information
sup
ean
vital to support the lean approach
y.
and boost efficiency. Alongside
v
provements
the more visible improvements like
better-qua
nfrastructure,
better-quality road infrastructure,
adoptio
hnology
the adoption of technology like EDI
will be an im
important step for the
ster
country if it is to master the lean
e
process an achieve the impressive
and
growth fore
forecast for 2020.
You can read more of Mark’s
re
ng
comments on Driving B2B, at
www.gxsb
m/morleym
www.gxsblogs.com/morleym
MARCH
2013
MARCH | 2013 |
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