Thursday, September 04, 2008

Excellent opportunity for outsourcing market expected in INDIA

India and other low Cost Countries (LCC s) are expected to tap the multi-billion dollar global component. According to Automotive Component Manufacturers Association (ACMA), the number of car models up soared from 503 models in 2007 to an estimated 644 in 2015, Experts find huge opportunity for outsourcing market in India.

“ As a result of cost competitiveness that India and BRIC nations like China and Brazil offer, the automobile industry has undergone two big changes. Firstly there has been relocation of manufacturing facilities to LCCs as they manufacture more value-added products at lower rates as compared to developed countries, secondly even R&D is gradually shifting to these countries.” says John Hadley, partner, Price Waterhouse Coopers–Automotive Practice, he further expects the emerging markets to contribute 49% to the total global auto component industry which is pegged at $25 billion.

Sontosh Mohan Dev, minister for heavy industries, finds full potential in India to be the global R&D center with twin advantage of having one of the largest pool of talented engineers and scientists

But according to RC Bhargava, chairman, Maruti Suzuki India, “India has still not reached the stage where we can design products on our own without assistance from our foreign counterparts due to lack of strong design capabilities. This is largely due to low expenditure of just 1.65% of the total revenue that goes into R&D vis-à-vis 7% in Japan,”

He further adds to his statement , “Since engineering resources are very expensive in Europe and other developed countries and are not available at short notice, it is an opportunity for India to develop design capabilities that will reduce the time cycle in an economy where the product life cycle is shrinking,”

While Sanjay Labroo, president, ACMA, finds the slump in industry due to high interest rates. According to him 'high inflation has given us an opportunity to invest in improving efficiency and developing design capabilities.'