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India’s success at automobile manufacturing is the epitome of multi-regional progress contributing to national good. The automobile sector in India contributes 7.1% to GDP. It is the largest manufacturing industry in the country, accounting for 49% of the manufacturing GDP, with an annual turnover of over INR 7.5 lakh crores and exports of INR 3.5 lakh crores.
Not only this, but the sector also creates 37 million direct and indirect jobs. The government of India aims to increase the automobile sector’s contribution to GDP to 12% and employment to 50 million. It is unequivocal in its aim of making India the automobile manufacturing hub of the world.
India manufactured 22.65 million automobiles in financial year 2020-21, with 13 million vehicles being produced only between April-October 2021.
Several factors contribute to the success of the automobile manufacturing industry in India. Apart from adroit policymaking, these include the availability of young, skilled, and affordable manpower, which has underpinned the creation of automobile and auto-parts manufacturing clusters.
There include the Delhi-Gurgaon-Faridabad cluster in north India, the Kolkata-Jamshedpur auto cluster in East India, the Mumbai-Pune-Nashik-Aurangabad cluster in Western India, the Chennai-Bengaluru-Hosur cluster in south India, and the Indore, Pithampur and Mandideep cluster in central India’s Madhya Pradesh.
I would like to take the example of the Indore-Pithampur-Mandideep automobile manufacturing cluster in Madhya Pradesh to elucidate. This cluster has risen in prominence over the past few years, and today hosts more than ten original equipment manufacturers, 200 component makers, more than 100 engineering and manufacturing firms. The state provides 200,000 technical professionals every year, apart from physical infrastructure like industrial parks, industrial corridors and testing facilities.
Success in automobile manufacturing has also been enabled by Madhya Pradesh’s dry port in Pithampur near Indore. In a bid to facilitate automobile exports, the state is strengthening its logistics infrastructure by adding inland container depots – expected to come up in the eastern and southern districts of the state, like Satna, Katni, Jabalpur, and Chhindwara. These will add to the seven existing container ports at Mandideep, Pithampur, Malanpur, Ratlam, Pawarkheda, Dhannad and Tihi. This is leading to the overall development of the landlocked state, which is strengthening its rail, road, and air logistics.
When magnified, progress in automobile manufacturing tells a tale of balanced regional development across the country. The automobile industry is immensely value accretive. It helps both the state and central exchequer, creates massive employment, and expands gross domestic product.
In the case of Madhya Pradesh, companies like VE (Volvo Eicher) Commercial Vehicles Ltd, , Force Motors and component (tire) manufacturer Bridgestone have benefitted from the state government’s support through land and infrastructure and have made it big.
VE Commercial Vehicles started manufacturing operations in Pithampur in 1986. Their unit in Pithampur is the focal point of all their eight manufacturing plants. VECV has invested INR 6,000 crore in Madhya Pradesh which powers its annual turnover of more than INR8,650 crores. The company manufactures 130,000 trucks and 15,600 buses every year and has even set up a state-of-the-art parts distribution center in Madhya Pradesh. All told, VECV’s Madhya Pradesh operations employ 30,000 people directly and indirectly, and support more than 100 ancillary units and suppliers.
Similar is the case of Force Motors, also operating in Pithampur since 1986, making the globally proven FPT engine and Case Intelligent Hydraulic system Tractor Loader Backhoe. Force’s investment of 1,700 crore drives its INR 2,000 crore annual turnover.
Yet another success story is that of Bridgestone, which makes over 20,000 tires per day at its Pithampur unit. The company has produced 89 million tires so far. The facts are there for all to see. In fact, the Government of Madhya Pradesh is set to organize the maiden Madhya Pradesh Auto Show in Indore from April 28-30, to showcase the state’s potential as an auto manufacturing hub.
The success of the automobile manufacturing industry in India is, truly, one of the best examples of multi-regional development across the country, where manufacturing clusters spread across the country are engaged in healthy competition and are contributing to our country’s progress. It is, in equal measure, a triumph of competitive federalism and of deft policymaking.
Disclaimer
Views expressed above are the author’s own.
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