West In­dia of­fers di­verse op­por­tu­ni­ties for au­tomak­ers

Auto components India - - COVER STORY -

The au­to­mo­tive in­dus­try has al­ways been at the fore­front of tech­nol­ogy and process in­no­va­tions. They in­clude assem­bly line, kaizen and just-in-time pro­duc­tion. These in­no­va­tions have tran­scended the bound­aries of the au­to­mo­tive sec­tor and ben­e­fited other in­dus­tries as well. The same trend con­tin­ues to­day. The ini­tia­tives of the Union gov­ern­ment, such as ‘Make in In­dia’ and ‘Dig­i­tal In­dia’, are ef­forts to fos­ter tech­nol­ogy adop­tion and global stan­dards in in­dus­tries. The gov­ern­ment is pro­mot­ing the adop­tion of ‘In­dus­try 4.0’ and smart man­u­fac­tur­ing through­out the man­u­fac­tur­ing sec­tor.

The West­ern re­gion of the coun­try has much strength that can be lev­er­aged to make it an at­trac­tive in­vest­ment des­ti­na­tion. The re­gion is the man­u­fac­tur­ing hub of sev­eral OEMs like Tata Mo­tors, Mahin­dra & Mahin­dra, MercedesBenz, Volk­swa­gen, Fiat Chrystler Au­to­mo­biles, Force Mo­tors, Ba­jaj Auto, Ford, Suzuki and Pi­ag­gio.

The re­gion al­ready has a strong auto an­cil­lary ecosys­tem. An au­to­mo­tive clus­ter com­pris­ing more than 1000 auto an­cil­lary com­pa­nies has been set up. Be­sides the MSME clus­ter, big sup­pli­ers are also present around this re­gion. With top-level qual­ity ac­cred­i­ta­tion they cater to the needs of the au­to­mo­tive com­po­nents man­u­fac­tur­ers across var­i­ous ge­ogra­phies. Qual­ity of the work­force is a ma­jor strength of this re­gion. The au­to­mo­tive in­dus­try in this area has not seen ma­jor labour un­rest, un­like many other au­to­mo­tive plants in oth­ers parts of In­dia. The re­gion is well po­si­tioned to ac­cess the mar­kets of var­i­ous states in north and south In­dia. The re­gion is also well con­nected to all ma­jor man­u­fac­tur­ing sites within the coun­try through the road net­work.

The state of Ma­ha­rash­tra on the west­ern coast has au­to­mo­tive clus­ters in the cities of Mum­bai, Pune, Nagpur, Au­rangabad, and Nashik. Pune, with 4,000 units, is the largest of these lo­ca­tions. MSMEs and Large-Scale In­dus­tries (LSIs) are el­i­gi­ble to re­ceive In­dus­trial Pro­mo­tion Sub­sidy, In­ter­est Sub­sidy, and Elec­tric­ity Duty Ex­emp­tion on fixed cap­i­tal in­vest­ments in the sec­tor. In­dus­trial units may also re­ceive an ad­di­tional in­cen­tive if they em­ploy more in­di­vid­u­als (dou­ble the num­ber of orig­i­nal em­ploy­ees) from lo­cal com­mu­ni­ties.

The ac­qui­si­tion of land and termloans by MSMEs and LSIs are com­pletely ex­empt from the pay­ment of stamp duty. MSMEs are also ex­empt from pay­ment of duty on the elec­tric­ity con­sumed. In the west­ern city of Pune, 225 Ger­man com­pa­nies and In­dian au­to­mo­tive groups are lo­cated in the Chakan in­dus­trial area. In Mum­bai, ports, roads, and skilled work­ers are the favourable fac­tors for com­pa­nies such as Ba­jaj Auto, Mercedez-Benz, Tata Mo­tors, and Mahin­dra & Mahin­dra.

Gu­jarat is the most re­cent auto com­po­nent man­u­fac­tur­ing hub in the coun­try. As of 2017, 15 en­gi­neer­ing parks have been es­tab­lished around the met­ro­pol­i­tan cities of Ahmed­abad and Ra­jkot. Ra­jkot, in cen­tral Gu­jarat, con­tains more than 500 auto com­po­nent man­u­fac­tur­ers. Fifty of these are OEMs and the rest are SMEs cater­ing to the re­tail (af­ter-sales) mar­ket. Gu­jarat’s In­dus­trial Pol­icy of 2015 guar­an­tees projects 10-year tax hol­i­days, rang­ing be­tween 70% and 90% – de­pend­ing on the lo­ca­tion and the amount of fixed cap­i­tal in­vest­ments. Mega projects worth US$153.40 mil­lion (Rs 1,000 crore), with a min­i­mum of 2,000 em­ploy­ees, are el­i­gi­ble for fi­nan­cial as­sis­tance from the state gov­ern­ment and as­sis­tance for iden­ti­fy­ing ap­pro­pri­ate project sites by the Gu­jarat In­dus­trial De­vel­op­ment Cor­po­ra­tion (GIDC). The state’s ports of Kandla, Mun­dra, and Pi­pavav have ded­i­cated ter­mi­nals for au­to­mo­tive ex­ports.

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