The President of the Automotive Component Manufacturers Association of India (ACMA) on how suppliers have innovated and assisted OEMs in meeting the stiff BS VI deadline, the resilience of the industry in a prolonged downturn.
04 Feb 2020 | 4563 Views | By Mayank Dhingra
The President of the Automotive Component Manufacturers Association of India (ACMA) on how suppliers have innovated and assisted OEMs in meeting the stiff BS VI deadline, the resilience of the industry in a prolonged downturn, need for greater collaboration with technology players, digitisation of the shopfloor and upskilling of manpower.
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The President of the Automotive Component Manufacturers Association of India (ACMA) on how suppliers have innovated and assisted OEMs in meeting the stiff BS VI deadline, the resilience of the industry in a prolonged downturn, need for greater collaboration with technology players, digitisation of the shopfloor and upskilling of manpower.
Do you feel there is enough enthusiasm among component players about the disruptive future and what are going to be the key areas in terms of technology which will see major displays by exhibitors at the show?
The component industry is a very resilient industry. This is not the first downturn that we are witnessing, it's probably the third or fourth. The Auto Expo 2020 – Components Show will be all about new technologies. The theme of this year's Components Show is 'Technovation' – Technologies of Future'. One thing that will definitely be on showcase is BS VI products because it is something that we, as an industry, are very proud of. The industry as a whole will be meeting the deadline as per our commitment.
Apart from that, there are going to be other safety-related technologies on display, as a significant number of safety features have been mandated by the government. From a technology point of view, we are creating an EV, Start-up and Innovation Pavilion and we expect several companies to display their prowess here. We really want technology companies and auto component manufacturers collaborating so that the industry can be on the upswing of the technology curve. We are very hopeful that this trade show will be a showcase of a whole lot of indigenous technologies.
Does the Auto Expo bring a vital opportunity for India Component Inc to forge relationships and eye more made-in-India exports?
Indeed. The Auto Expo is one of the largest trade shows in this part of the world and what is very remarkable is that we have grown more than 25 percent over the last edition. Also, what's worth noting is that the trade show is happening in a downturn year. It is, therefore, very commendable that the entire industry, as a mark of solidarity, has come together to showcase our collective strength and capabilities.
From an exports perspective, the component industry ships almost a quarter of its production. Of the US$ 57 billion turnover in 2018-19, the industry exported US$ 15.1 billion. At the Auto Expo - Components Show, we are expecting a significant number of international visitors. We already have more than 2,500 visitors from 45 countries who have registered online. That apart, we have seven country pavilions from Japan, South Korea, UK, Germany, China, Turkey and Canada. In addition, there will be participation from players from 13 more countries. ACMA will also be hosting an IPO forum which will bring together IPOs (international purchase offices) of various multinational OEMs. Exports promotion and forging international relationships will therefore be a key focus of the Auto Expo 2020.
With shifting dynamics in the industry, do you think that collaboration is going to be the key mantra for the future? Do you see more partnerships getting formed between suppliers (both Indian and foreign) on sustainable mobility solutions?
Collaboration has been the key for evolution of the auto component industry. Right from the day when Suzuki and Honda came to India, they helped forge relationships between Japanese and Indian component manufacturers. Whether it's a JV or a technical alliance, collaboration is the bedrock of the Indian auto component industry and it will continue to get even stronger as the technical complexities in the vehicles increase and the Indian market grows. Collaboration allows Indian companies to access technologies, while the foreign companies can access the Indian market though their Indian partners. It is, therefore, a win-win situation for both.
After BS VI, how do you see the industry preparing for the second phase of CAFE norms set to be implemented in April 2022?
Transition from BS IV to BS VI has given us a lot of confidence. We at ACMA meet OEM requirements, who, in turn, meet the regulatory needs. It's like teamwork and I have all the faith that together we are capable of rising up to any technological challenge.
Having said that, the regulation-formulation must take into account the ground realities as one wouldn't want vehicles to be over-regulated, which could lead to more expensive vehicles that, in turn, could impede their sales. We, therefore, need to strike a right balance. Also, there should be a definite roadmap for introduction of regulations as their ad-hoc introduction can throw the industry out of gear.
Will 2020 mark the onset of mass electrification of vehicle fleets of major OEMs?
I guess that is something we need to wait and watch. Till date, the component industry has responded well to the needs of the vehicle industry. When we talk about mass adoption of EVs, the only scheme that is available today is the FAME-II scheme and as of now, it looks that the adoption of e-buses is going to happen very rapidly. The uptick, however, in personal mobility segment is expected to take some more time.
Do you think the Indian component industry is harnessing engineering talent judiciously and coming up with indigenous innovations?
India is known for its frugal engineering and the huge success that we have in the automotive space, is all because of our engineering skills. Our engineering skills so far have stood us in good stead. However, the automotive industry around the world and in India is undergoing a sort of upheaval. Connected, Autonomous, Shared and Electric mobility are redefining the automotive landscape. Further, shopfloors are increasingly getting digitised. To remain competitive, we need a supportive ecosystem that will enable creation of skills in the domain of new-age materials, artificial intelligence, robotics, additive manufacturing and machine learning.
While the Tier 1s have remarkably improved in terms of process maturity and offering best-quality products, what challenges do you see the Tier 2s and Tier 3s facing?
Tier 1s have performed reasonably well so far. A recent ACMA study reveals that 91 of our members are more than Rs 1,000 crore (in annual turnover). One feels reassured that the industry is scaling up well. However, it is also a fact that the Tier 2s and Tier 3s continue to pose a challenge and need significant handholding including on the basic QCD (Quality, Cost, Delivery). Smaller companies are also challenged on the technology front and access to capital.
Tier 1s will need to do a little bit more in terms of handholding than what they are doing currently. Whilst the industry is witnessing a downturn now, we need to prepare our Tier 2s and Tier 3s for the growth cycle. We need to make sure that they scale up in time and that the entire value chain remains robust when growth returns.
What learnings has the industry taken away after introspecting on the ongoing slowdown?
One thing is clearly evident that the industry is very resilient. Despite a downturn, not a single company has gone out of business. In terms of lessons, this is a great time to look inwards. It is a time to see how to optimise operations, critically analyse our business, focus more on quality and how to become leaner and cut flab because these things often get overlooked in the growth phase as then there is always a pressure of delivery.
Another important aspect to focus on is skilling of people — skilling, upskilling and reskilling. We need to analyse the skills portfolio of our people very critically and make sure that they are ready for the next phase of growth cycle. And again, the next growth cycle will be very different as the current downturn is being largely driven by technology. We will need to ensure that our people are prepared to meet the tech-driven consumer expectations.
Moreover, the third thing that one can look at is seriously analysing the business portfolio for purposes of de-risking. While business portfolio is determined by a company’s strength, an ideal portfolio would be one where the company is well represented in the domestic and export markets from a market perspective, and from a customer perspective, there could be a balance between OE and aftermarket customers.
How is the Indian component industry gearing up to address the anticipated people skills shortage in the coming years?
We have set up the ASDC, which is a joint initiative of ACMA, SIAM, FADA and the NSDC. In fact, ASDC is probably the first-of-its-kind sector skills development council which is really successful.
We are banking very heavily on it for the right kind of curriculum for next-generation skills, the right kind of training partners to deliver these skills and lastly, the right kind of evaluation system which can verify that the candidates are armed with the right kind of skillset.