The fast growing auto sector may fail to become a global provider of vehicles and auto services that official targets envision, unless the Government provides more support and Indian companies themselves raise the bar.

These are the views of leading Indian auto companies contained in KPMG's India Automotive Study 2007 - Domestic Growth and Global Aspirations.

According to the report, the Indian automotive industry is worth $ 34 billion a year and contributes 5 percent of India's GDP.

It produces about 1.5 million vehicles and employs directly and indirectly, as many as 13 million people.

The Government's Automotive Mission Plan has called for quadrupling of automotive sales to more than $145 billion by 2016 and for the auto sector employment to grow from around 13 million today to 25 million.

But companies interviewed by KPMG expressed that this rate of growth would be difficult to achieve while infrastructure investment remains relatively low, and few companies have achieved global scale.

KPMG found that senior auto executives are concerned about India's eroding cost advantage and the increasing challenges of rewarding and retaining talent, pace of consolidation in some parts of the industry and about the challenges companies face in building Indian auto brands.

Labour costs are becoming a big concern. Companies now report that a shortage of talent is driving up rates and increasing staff turnover.

Many companies believe that Indian manufacturers will have to work hard to increase productivity as labour costs rise.

Also, government needs to move faster in building domestic and export infrastructure and in encouraging research and development investments.

Mr. Rakesh Joshi

Joshi Enterprise

Manager, Joshi Enterprise
Dispur, India

Free Member, Joined :02/02/2007
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