NEW DELHI: China may be the world's shop floor, but India is rolling it out faster when it comes to automobile exports.
India exported a total of 2.30 lakh cars, vans, SUVs and trucks between January and July 2009, a growth of 18% even as China’s exports tumbled 60% in the same period to 1.65 lakh units.
The Indian domestic market may be just 19% of China’s — which has overtaken the US to become the world’s largest — but the ‘Made In India’ tag, especially on small cars, has clearly acquired a global cachet, helping auto exports grow even as other countries suffered a slump.
Industry experts pointed out that India scores due to its liberal investment policies and high quality manufacturing which stems from its growing prowess in research and development.
India’s biggest advantage is its edge in small cars and the way companies — including global giants — are using the market for selling, as well as developing, new compact models.
India itself presents a big opportunity in small cars given their big-volume status in the domestic market. But the global recession and incentives offered for fuel-efficient low-emission vehicles in big markets like Europe and the US have also made India a focal point for companies.
Cheap labour costs and especially-tailored lower manufacturing tax (8% excise duty) make small car manufacturing in India a highly-competitive option which more and more companies are padding up for — Suzuki, Hyundai, Nissan, General Motors, Toyota, to name a few. China, in contrast, is more of a big car producer and has been hit by the global slump in demand following the economic recession.
"Among major reasons for India is a favourable investment regime. While India allows for 100% FDI in auto sector, in China you can only be present through a joint venture with a local partner. If you use the country as a major export base, you have to share the profits with your JV partner, which no company would like to do," said Rakesh Batra, National Automotive Leader for E&Y in India.
And while sharing profits may be a major reason, analysts point out that sharing technology with the JV partner may also be a cause of concern in China, considering the infamous expertise of its companies in culling out cheaper fakes at lower costs, even as they may be of a lower quality. India also scores due to its superiority in research and development brains.
Source : TOI