"The opportunity lies in creating a distinct brand, not by aping existing technology and business models, but by creating an authentic niche for ourselves in the newly evolving marketplace and societal needs."
01 Feb 2016 | 8765 Views | By Dr Pawan Goenka
Look around you. In just a blink of an eye, the market has exploded with a highly competitive landscape commoditising every product and service. Customers’ choices are increasingly governed by their brand preferences, not just for the product, but at times for the country of origin. Research proves that country ...
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Look around you. In just a blink of an eye, the market has exploded with a highly competitive landscape commoditising every product and service. Customers’ choices are increasingly governed by their brand preferences, not just for the product, but at times for the country of origin. Research proves that country of origin, design and manufacture are ranked higher than traditional drivers of choice like price, and availability. Countries soon become associated with what they deliver – tangible and intangible, rational and emotional. One begins to wonder, what qualities are associated with ‘Brand India’?
The manufacturing industry in general and automotive in specific is uniquely positioned to boost the brand image of a nation. Take countries like Germany, Japan, UK and Korea. They are synonymous with engineering skills, design ability, manufacturing competitiveness and high quality standards, all thanks to a large part to its automotive industry. In turn, they have leveraged the country’s brand premium for their global expansion.
Many would consider India as a late entrant in the automotive space. However in the last 10 years, the Indian auto industry has evolved by miles. From just being an assembler and supplier of small, low tech components, India is increasingly being acknowledged for its skills and competence in automotive engineering, vehicle manufacturing, automotive software and frugal innovation. Auto exports from India have grown from 196,342 vehicles in FY05 to 708,386 vehicles in FY15, a growth of 13.7 percent CAGR over the last 10 years while components exports have grown from Rs 7,937 crore in FY05 to Rs 68,500 crore in FY15.
FRESH THINKING NEEDED
Today, almost all major global OEMs have an India development centre with plans to increase sourcing and use India as its manufacturing base. With the government’s support, OEMs and suppliers have put in herculean efforts in shaping the industry’s achievements. There’s no surprise that India is ranked 10th in the auto segment of the Future Brand’s Country Brand Index (CBI) for 2014-15 – the only segment where India is featured among the Top 10 across industry sectors like FMCG, electronics, fashion and luxury.
Having said that, one still needs to wonder, ‘Have we established a rational and emotional value proposition of Brand India?’ It is still associated as an LCC (Low Cost Country) with lower level of manufacturing quality and has a long way to go to improve its aspiration quotient. Will a customer in the UK aspire to own a car because it is ‘Made in India’ or will he rather pay a premium for one designed and made in Germany?
With the changing demands from mobility solutions, the definition and content of an automobile is rapidly changing. In order to gain greater success and give Brand India a podium finish, fresh thinking and a well-coordinated effort is needed. The opportunity lies in creating a distinct brand, not by aping existing technology and business models, but by creating an authentic niche for ourselves in the newly evolving marketplace and societal needs. I have reasons to believe that India has the necessary strength to ride the change and come on top.
If anyone ever doubted our ability to leapfrog our indigenous technology, all we need to do is look at what ISRO has achieved. Be it the Chandrayaan or the Mars orbiter, ISRO has proven that superior offerings can come at a frugal expense. Even though our journey towards the final frontier began much later than the NASAs of the world, look at what we have accomplished with limited resources and time. I personally believe that a similar delivery is possible in the automotive space. And why not?
POWER OF YOUNG INDIA
Young demographics are India’s biggest inherent strength. This not just provides us with a large market opportunity but an even larger asset – a talent bank. With adequate focus on skilling and enhancing work experience, the youth can help elevate the industry when it comes to quality and innovation. India needs to acquire high-end tech and innovation capabilities. For this, we need sustained investment in India as well as for acquiring overseas assets. Additionally, technical skills need to be made aspirational and incentivised on par with managerial skills so that the youth are motivated to pursue careers in technical domains.
Enhancing ‘Brand India’ will require a consorted effort from the government, industry and academia towards multiple thrust areas, towards curbing the instinct to hawk low cost arbitrage. Towards enhancing infrastructure led ecosystem for future mobility solutions. Towards offering high-end design and manufacturing capabilities, best-in-class skills and eventually an innovation hub for next-generation solutions.
We do need to find the platform on which to build (automotive) Brand India. I believe we have two platforms to build on – frugal engineering and IT expertise. The latter has been an acknowledged strength of India for some time but more in terms of providing software expertise to the world and not in terms of building this expertise into our own (automotive) products. Can we take a pole position in this? In the last several years, frugal engineering is being recognised globally as a strength and not a way to cut corners. The world acknowledges that India invented it and frankly all others are now imitating it, thanks to the exposure they now have to Indian engineering ecosystem. Can we translate these two strengths into a brand image of India – not that of an LCC with low labour cost as the only advantage, but of a country that has the ability to design products differently and use its IT expertise to give customers a product that others cannot?
Brand building has an extremely long gestation period to reap any formidable result. In spite of challenges, the automotive industry has continuously steered the path of creating world-class products, building a manufacturing ecosystem and frugal innovation. Efforts towards brand building lie more at the backend, like investments in technology, innovation and skill building.
The output of these sustained efforts will help build a strong emotional association with society. Ultimately the ‘Made in India’ brand – with a cost USP – will need to elevate to an ‘Innovated in India’ brand that can command a premium and evoke a greater sense of pride for the nation. This journey can only be taken if all stakeholders equally believe in leapfrogging the image for Brand India.
This exclusive column was published in Autocar Professional's 11th Annversary Issue (December 15-2015)