Component players in India are gearing up to grab outsourcing opportunities. Scale, quality and time are becoming crucial to serve global markets.
India's dream of becoming a manufac-turing hub might after all come true. Low-cost operations and skilled professionals are driving the wave. Companies have been expanding their capacities in recent years; last year Rs. 1,000 cr were invested by companies. Surge in expansions have been necessitated due to the sudden increase in orders from global suppliers and the strong domestic market. Before coming up with long-term contracts Original Equipment Manufacturers (OEMs) look at the ability of the suppliers to meet requirements on time.
Investment in R&D is still in the infant stage in India, Indian companies have to move up the value chain in order to get big-ticket orders from global OEMs. They are still into product modifications and reverse engineering of products. Compared to the R&D expenditure of 5-7% by global tier I players, India's R&D spend is only 1%. Some of front-runners like Sundaram Fasteners, Sundaram Brake Linings and Mico have started R&D facilities. Sona Koyo, Rico Auto and Sundaram Fasteners have started initiatives to develop products according to customer requirements. Foreign companies Delphi and Bosch (Mico) have set up their technical centers in India.
Quality plays a key role besides the labor cost in the automotive components sector. OEMs are looking for quality component manufacturers. India is ahead of the many emerging markets on the quality front. Four Indian companies have won the prestigious Deming prize award. Other companies are also improving their quality standards to grab export orders from the OEMs. Quality standards are achieved mainly because of the availability of highly skilled professionals. |
