India is the new frontier
BY IAN PORTER | 12th Mar 2015
This has created a great opportunity for Australian engineering and service companies, according to AusTrade’s representative in India, Nicola Watkinson.
Releasing a new report into the opportunities for automotive research and development in India, Ms Watkinson said Indian car manufacturers were more aware now of where they needed help so they could defend their market share against offshore companies.
“Two years ago, the car market shrank for the first time and the industry was in shock,” said Ms Watkinson, who is minister commercial and senior trade and investment commissioner for South Asia, based in Delhi.
“In addition, the local manufacturers – including Mahindra and Tata – were losing market share to people like Honda and that was a wake-up call for them.
“That’s when we started seeing a change in attitude. Previously they saw themselves finding their own solutions. They were not willing to pay for a solution.
“They realised if they were going to compete for the domestic market, they were going to have to do something a bit different.”Ms Watkinson was addressing the Asia Pacific Automotive Engineering Conference in Melbourne, where she released a new report by KPMG that examines the opportunities for Australian automotive companies in India.
She said the report has identified six main areas where there was a need, and a willingness to pay.
The six areas are lightweighting, alternative fuels, powertrain, vehicle electrification, electronics and safety technology.
“People know India is a big market, but up to now there has not been a great deal of work done drilling down to see where particular opportunities lie and with whom they lie.
“That is what we are doing now.”Ms Atkinson said India would soon be the world’s fourth-largest automotive market and said the medium to long term prospects were “still pretty good”.
The KPMG report also indicates where there is less opportunity.
“If you want to do direct component supply, there are probably other markets like Thailand or, perhaps, Indonesia where you could set up alongside one of the major OEMs producing in that market.
“Here, what we see they want in India is Australian engineering, technology and research strengths.
“This offers a new market for providers of these services. They don’t have to close up and move everything to India. This can be an expansion of their operations.
“You can have your brains trust here and maybe a satellite office in India to liaise with the customer.
“This report highlights that we do have a strategic competitive advantage in this space.
“Partly because we have such innovation but also because we have the capacity to work alongside the Indian OEMs in a way that’s different to the American and European providers, who just want to offer, if you like, a black box solution.”Ms Watkinson said it was important to understand the Indian approach to manufacturing, adding that they like to collaborate on projects to ensure that they are not paying for things they do not need.
“That’s the Indian thing. The whole essence of frugal innovation is to strip back the things you don’t need so that you can keep the value but reduce the cost.”“People mistake frugal innovation by thinking it’s just a way of doing things cheaply, but it’s not.
“It’s about stripping away the elements of something that you don’t need so that what remains is the value that you want. By taking away the bits you don’t need and leaving the value, you do take out some cost.”An example might be a decision by an Indian manufacturer to get rid of elaborate buttons on a sound system but to keep the sound performance of the radio itself.
“There, they have saved a bit of cost, but kept the quality.
“There was a range of producers of two-wheelers, three-wheelers and four-wheelers in India and there are opportunities across all those areas. This is not just a passenger vehicle solution.
“Some of the good opportunities are going to be with the two-wheelers and the tuk-tuks.”
