Sunjay Kapur, Chairman, Sona Comstar & Co-chair, CII Manufacturing Council, in an interview to BW Businessworld’s Siddharth Shankar, talks about the challenges and opportunities for the Indian auto industry, the slowdown and how we can emerge from it, whether India can emerge as a manufacturing hub, among other things. Excerpts
What are your views on the production- linked incentive (PLI) scheme being extended to the auto and auto components sector?
It’s a great initiative. In fact, the government has been encouraging in terms of nurturing the auto component industry. We have been working closely with the government to see how we can create export champions. Let’s hope that we are able to create an automotive hub or manufacturing hub in India. We have been trying to do this for many years. We are going to have to invest in technology, not just for Tier-1 suppliers, but Tier-2 and Tier-3 suppliers as well. We’re going to have to invest in technology in terms of process innovation, raw material, products. And we are very hopeful that this is going to give a great boost to the automotive sector.
What are the key challenges and opportunities for the Indian auto industry? Where does the future lie?
The biggest challenge we have today is from the supply side. Can we get supplies on time? Demand exists, especially in passenger cars and twowheelers. The other challenge we see is in demand creation for commercial vehicles. We have had a bad 15 months as far as commercial vehicles go (due to regulation changes) and we continue to see low demand in the commercial vehicle space. We’ve seen strong demand from rural India for tractors; we have never seen the sales of tractors the way they have been in the last few months. Strong rural demand will also positively impact passenger cars and SUVs. To answer the second part of your question, I think the future lies in us building a strong manufacturing base in India. We have the capability and the technology, we have the experience of exporting and if companies can build a strong manufacturing base in India and create an auto component hub in India, that’ll help growth in the future.
There is much talk of manufacturing shifting base from China to India. What is the reality? Is there a possibility of this happening?
There definitely is a possibility, it won’t happen overnight though. We are not the only country that is vying for that business, all of Southeast Asia will vie for that business. We saw the opportunity that India missed during the US-China trade war, which went to Indonesia, to Vietnam and Thailand, etc. Countries like Mexico will also pitch for business that leaves China, if it does leave China.
The government needs to invest in the ease of doing business of things, and the cost of doing business needs to improve. Also, the private sector needs to invest in R&D. So there is a great opportunity, it’s how we leverage that opportunity that really counts.
What are Sona Comstar’s future plans. There’s been talk of the company planning an IPO, when do you plan to hit the market?
From our perspective, we are well positioned in the ICE (internal combustion engine) as well as the EV (electric vehicle) segment. We will continue to grow our business and adapt to our customer’s needs and requirements. Our growth plans are definitely geared to provide our customers with system solutions as opposed to just components and we are headed in that direction. As far as the IPO goes, yes, we have Blackstone as an investor today and the natural exit for an investor like Blackstone would be an IPO. So yes, we plan to go public.
How do you think the country can emerge out of this slowdown, what would be your magic mantra, if you were asked to give one?
The Indian economy, in my view, has adapted well. What this pandemic has taught us is that anything is possible. A lot of measures that we were planning to implement for years such as building smart factories or digitisation have happened overnight. So I feel we need to look at these as opportunities. Like they say, “never waste a good crisis.” I feel it’s not going to be a V-shape recovery in every industry, however we will emerge stronger because we have learnt that anything is possible in this sort of scenario. I saw a much harder time in 2008-09.
How do you think India can achieve the goal of Atmanirbhar Bharat? The Indian automotive sector imports much more than what it exports. How can this be reversed?
Our imports are at $17 billion and export at $15 billion, somewhere in that range. However, as we localise and move towards local sourcing — and in the component industry we have been doing this for years and years — I feel that we are well positioned to leverage the opportunities of Atmanirbhar.
Atmanirbhar is really all about the fact that we should create local content and reduce our import content, and eventually become a net exporter. I think one of the big challenges is going to be the electronics industry.
I also feel that the government is working with several different sectors, be it from auto components, textiles, fisheries to even electronics in creating export champions and the way to create these export champions is through bringing in technologies and building manufacturing capabilities within India.