India may lose the edge in auto sector: SIAM chief

Business Line (Dr Pawan Goenka, President, SIAM; flanked by Mr R. Dayal (left), President, SAE India; and Mr Srivats Ram, President, ACMA, at a press conference in Chennai on Wednesday. – Bijoy Ghosh
Government needs to look at infrastructure, speedy project approvals, labour reforms: Goenka

Chennai, Aug. 31:
India is in the danger of losing its competitive advantage in automotive manufacturing, thanks to rising costs of power, logistics, salaries and embedded taxes, says Dr Pawan Goenka, President, Society of Indian Automobile Manufacturers (SIAM).

Speaking at a press conference of Society of Automobile Engineers, India, to announce a three-day conference on ‘Sustainable technologies for safe and smart mobility' in October, Dr Goenka observed that emerging markets such as China were able to produce cheaper.

China, in particular, offers a 12 per cent cost advantage over India, he later said in an informal chat with journalists.

“While GST (the proposed Goods and Services Tax) will help, the government also needs to look at competitive infrastructure, speedy project approvals and labour reforms for India to hold on to its competitive edge,” he said.

Long way to go

Dr Goenka noted that while India has emerged as a preferred automotive manufacturing hub, it still has a long way to go before it becomes a global power in design.

Dr Goenka said, “Very few companies have the complete knowledge of designing products in-house. Auto companies have to look beyond today and start investing in long-term technologies.”

On Slowdown

Commenting on the current slowdown in the auto industry, Dr Goenka hoped it would not last more than six months. “If it continues beyond that, the industry will be impacted,” he said.

In 2006, the industry body had set a target for the auto industry to reach $145 billion by 2016, employ 25 million people and contribute to 10 per cent of GDP.

“We are on track to achieving the revenue output, although 10 per cent of GDP may not happen given that the economy has grown faster,” he said.

APAC meet

The 16th edition of the Asia Pacific Automotive Conference (from October 6-8) will be held for the first time in India (at Chennai). The event, organised by the Society of Automobile Engineers, will be inaugurated by Mr Venu Srinivasan, Chairman and MD, TVS Motors. It will see participation from major national and international players in the industry, government and academia.