Thursday, December 25, 2008

Automobile revoluation in India

Telecom revolution in India is a telling anecdote in discussion groups around the world. Telecom tariff in India has touched the lowest in the world offering variety of service providers. Leading handset manufacturing companies like Nokia, Sony, Motorola and leading provider companies like Singtel, Vodafone, Virgin are a few investors in India to be listed here. The outcome is a competent mobile market urged to innovate almost everyday.

Success stories are replicated in many other sectors too; one among them is Car industry. I am not discussing the pros and cons of the Singrur controversy but the larger spectrum of the availability of number of car brands on Indian Roads. I remember the days when my aunt (that was one of the first car that was bought in our family), bought a car more than two decades ago, neither me or anyone else in my family could imagine any other car than Ambassador cars owned by Hindustan Motors. Indian car industry was synonymous with Hindustan Motors for more than five decades til other companies engineered their growth into the sector starting with Maruti Udyog Limited. Earlier, there were only two or three Cars brands, like Fiat and Ambassador, ruling the Indian roads, but today global auto players like Honda, Skoda, General Motors, Volvo, Ford Motors are investing big bucks in India and launching their Car models with more refined technology, design, comfort, styling and safety.  This shows the industry has grown manyfold since the first car rolled out on the streets of Mumbai (then Bombay) in 1898. Looking into the specifics, one can understand this was more in the last one decade.

Unlike the USA, the Indian passenger vehicle market is dominated by cars (79%). This is supplemented by the factors in the automobile industry like; 

  • India is the largest three-wheeler market in the world.
  • India is the largest two-wheeler manufacturer in the world.
  • India is the second largest tractor manufacturer in the world.
  • India is the fifth largest commercial vehicle manufacturer in the world.
  • The number one global motorcycle manufacturer is in India.
  • India is the fourth largest car market in Asia - recently crossed the 1 million mark.

There are cars of price range starting from Rs 2 Laks to Rs 1 crore in Indian Market. If Nano materialises, there will be an upsurge in per capita spending and purchasing power parity in Indian subcontinent. Today, there are more than sixty car brands on Indian roads offering more options in terms of affordability, luxury and compatibility for consumers.

With more companies competing for their space, insurance and banking sectors also sensed the opportunity to grow. Car loans and mandatory compliance to car insurance benefited more intra than inter sectoral growth in these respective sectors. Look at the number of automobile workshops around us and the number of workers employed. More than anything, it has put the State into a demanding situation where roads and related infrastructure have become the prominent talking points in the plan and development process than ever. With the increase in global petroleum price and the awareness on Global warming, more strictures are added to the vehicle pollution certification demanding more investment and innovation in research and development area related. Indian innovation in automobile sector is already under tremendous pressure to reduce its pollutant level. If they succeed, auto will take centre stage of the globe and if they fail, poor man’s gaadi will be replaced by cars like Nano.  Whatever be the outcome, this will lead to the change in the landscape of the cities and smaller towns in this country. This will lead to an automobile revolution of twenty first century akin to industrial revolution of eighteenth century. This also ensures that though the country is preparing to become the global hub for the small size cars, it envisions an inclusive growth of all sectors and sessions of the society like in Telecom sector.

Wednesday, December 24, 2008

Green field strips is the key……..

It was one of that fine afternoon I took my flight to Kathmandu way back in 2005. It was my first international flight and I was gleaming with the fact that I was carried by Jet Airways. Two years later, I had another flight to Kathmandu by state carrier Indian Airlines. In between I had many domestic flights and I could sense the differences in the facilities offered by private and public airlines. I was told by many during the second flight that many reimbursement schemes are possible only if they take state carrier. This thought came to my mind when two of our Hon. member of Parliaments delayed the departure of Delhi  - trivandrum flights a couple of days ago. They were complaining about decayed condition of the state carrier. I was surprised by two factors; why don’t they raise these matters in the Parliament and why don’t they prefer a better alternative offered by the private companies? Looking more into the matter, I learnt that one of the MP is from a small town, Allapuzha which is placed in between both Cochin and Trivandrum Airports. The other day when I took a flight from Delhi to Cochin via Hyderabad, I found more that 80% of the passengers embarked from Hyderabad are temple devotees to Lord Ayappa. I was astonished by the fact that there is no green field airport near to Sabarimala, one of the most sought after pilgrimage destination in this country. Why can’t that MP from Allapuzha (which is incidentally adjoins Sabarimala) voice for such a green field strip so that it would be a profitable one from day one onwards. It is the same area where largest NRK population to Europe, US and UK originate from. Why cant it be a stop over green field strip for them while they take more than 15 hours flight to home.


One of the recently conducted studies by KPMG says;

At present, India has about 80 fully functional airports. In addition, there are another 368 landing strips that function as makeshift airports for limited purposes. (my comment; this is the reason for slow growth)

As many as 156 belong to the defence or semi-defence sectors and various state governments, while 63 are owned by the private sector.

Of these, just 24 airports account for a whopping 94 per cent of the current air traffic and the balance is spread over 36 smaller or regional airports.

There is an upsurge in the domestic air travellers in the last couple of years thanks to the entrance of private players in the sector. But intimidating tax system and differential pricing has not helped the sector to grow in these times. The sector is looking forward to a change and I am sure like Tirupati and Dharamasala were connected as the private airlines did which hitherto not, there are many points for connectivity in this Incredible India