Change on wheels

The Ambassador is a powerful image for all that was wrong, and even right, with India8217;s self-reliant import-substitution. Because of visibility the automobile industry is often equated with national pride, and successful automobile production accepted as a surrogate indicator of a country8217;s coming of age, just as threat to car manufacturing from cheap imports raises banners of being American and buying American. In hindsight, the Maruti-Suzuki venture was instrumental in creating a globally competitive auto ancillary business. But the fact remains that in early 1980s, few global auto majors believed India capable of producing cars and were unwilling to transfer technology. The wheel has come full circle, with the country that delivered Morris Minor now poised to sell Jaguar and Rover brands to India. Barring early Maruti days, the Indian ascent has been private sector-driven, a point to be noted for another sector often identified with national pride 8212; civil aviation. Auto Expo 2008 provides further grist to the mill. Developing a new car isn8217;t cheap, and R038;D costs are considerable. Yet, Tata and Bajaj have indigenously developed cars that will be cheapest in the world, especially when indirect taxes are netted out for exports. Broadening the domestic market is one aspect, but there is also an export market to be tapped.

For instance, two-wheeler and second-hand car markets will be revolutionised. But more importantly, World Bank studies highlight continued costs of doing business in India. Had that not been the case, India8217;s human resource strengths would have propelled manufacturing, and automobile production, to greater heights. Stated differently, having developed their cars, will Tata and Bajaj relocate production overseas, as other manufacturing companies have? With Indian production occupying the low-end and cheaper end of the spectrum, Auto Expo also reinforced the phenomenon of global majors entering the higher-end in droves, recognition of India8217;s income and consumption growth.

Contrary to Left impressions, automobiles aren8217;t elitist, and multiplier benefits are considerable. Comrade MPs have a lot to learn from the CITU union in Uttarpara8217;s Hindustan Motors factory. Not only did the CITU-affiliated union oppose a strike, workers have just voted that this union be elected to represent them in negotiations with management. There are jobs at stake. This is not just an endorsement of economic reforms 8212; the West Bengal CM can take comfort, it is also an endorsement of multiplier benefits from investments. There is this broader message from being Indian, buying Indian and selling Indian.