Abdul Majeed, a partner and the national automotive leader at PwC India, shares his views on India’s car manufacturing industry.
Why is India so keen to grow the car mobile manufacturing industry?
The issue that India has right now is how to take people who are dependent on agriculture or do not have great skill and make them employable. To my mind, the automobile sector fits that bill. If you can provide on-the-job training to that part of the population that is not well-educated, you should be able to convert them easily into an employable situation in the automobile industry. Every month you have a huge number of not-very-skilled people coming in to the job market.
From whom is India facing the most competition in the sector?
The biggest competitor is China. If India does not get its act together, you might have new locations, for example countries such as Thailand, Malaysia and Indonesia, that could be competitors. Vietnam is coming up very well because that’s a very cheap low-cost location. If India doesn’t get its act together, I think we might lose to these folks.
What are your expectations for the upcoming union budget?
We have lots of old cars on the road, so I’m expecting the government to come out with an incentive plan to replace those old cars. Most of those cars are bad for the environment, and India is also under tremendous pressure globally on climate change. I’m also looking for some more incentives for the electric vehicles or alternative-fuel vehicles because India wants to develop sustainable transportation. I’m hopeful the government will come out with goods and service tax roadmap and an overall GST rate. If the rates are less than 20 per cent, it’s a very good move.
What else needs to happen to boost the industry?
India also needs to think about skill development. Not much research and development is happening in India. Skill development and R&D investment have to go up if India wants to play a meaningful role in the global automobile industry. The domestic market itself has not grown the way we expected it to grow. With a slowdown in economic growth, we are not really able to convert huge numbers of people from poverty to above the poverty line. Unless this happens, you won’t have new customers.
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