Interview with Sugato Sen, Deputy Director General, Society of Indian Automobile Manufacturers (SIAM)

Company Description: Society of Indian Automobile Manufacturers (SIAM) is the apex Industry body representing 46 leading vehicle and vehicular engine manufacturers in India. The association works closely with all the concerned stakeholders and actively participates in formulation of rules, regulations and policies related to the automobile Industry. SIAM is also an important channel of communication for the automobile Industry in India with the government, national and international organisations.  SIAM organises the biennial Auto Expo series of trade fairs in co-operation with Confederation of Indian Industry (CII) and Automotive Component Manufacturers Association of India (ACMA).SIAM has also been striving to keep pace with the socio-economic and technological changes shaping the automobile industry and aspires to be a catalyst in the development of a stronger automobile industry in India.

The Indian automotive industry has evolved in 20 years from a small market to one of the growth engines of global OEMs. So corollary to that, how prominent is SIAM amongst your counterparts in the global automotive market?

I think we have become one of the most important associations amongst our counterparts globally. A lot of other automobile associations in the world observe the strength of our headcount and also how we operate. Infact, they try to emulate our best practices. During 2003, SIAM was invited for Asia-Pacific Economic Cooperation (APEC) automotive dialogue. Because of our prominence, we were taken on board to understand the market dynamics of Asia, especially India. And now, we have become a permanent invitee for the APEC automotive dialogue. This is because they felt that SIAM’s contribution in promoting its industry has been quite substantial.

It’s a known fact that Pragati Maidan is undergoing a massive overhaul in early January’14. So can we assume that the next Auto Expo will be held at the India Expo Mart, Greater Noida?

Yes, that’s right. Infact during Auto Expo 2012 in January, we have announced that the next Auto Expo will be held from February 6-12, 2014. At that point of time, the venue was not decided. But now the members have decided that the exhibition for vehicles will be held at the India Expo Centre and Mart at Greater Noida. The Auto Expo 2014 will be much bigger in terms of exhibition space as we will have 50,000 square metres of occupied space by exhibitors as compared to less than 40,000 square metres we had at this year’s Auto Expo. However, the auto component industry is unlikely to share the same venue.

In order to have a trial run ahead of the 2014 expo, SIAM will be organising a ‘Bus and utility Vehicles Show’ from February 15-18, 2013 which is supported by the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises, Government of India. The primary objective of the show is to showcase latest technological developments; providing manufacturers right platform to interact with customers and launch products; better understanding the requirements of different segment users; more visibility, and focused media coverage

Early this year, SIAM had announced a voluntary recall policy. What has been the response to it? Are members a bit more proactive than before?

Definitely, they are more proactive than before. One of the premium carmakers had raised this issue at an executive committee a long time back before the announcement of the voluntary recall policy. Subsequently, many other members have been recommending SIAM for the same. We have been very happy that we have come with a voluntary recall policy mechanism. Now most of the members are reporting proactively about the vehicles’ defects to the government, industry body, and also to their customers.

SIAM had earlier organised a conference on ‘Diesel for Future: Economy & Environment’ in the Capital.  So have all the stakeholders been able to come out with a resolution?

This is a very sensitive and controversial issue at this moment. The diesel-driven cars of today are very low-polluting, fuel-efficient and low-on-maintenance. But there has been a negative perception about those vehicles among various other bodies. The inherent advantages of diesel are not acknowledged by many quarters in India. As a result, policymakers are not able to come out with a unified policy on diesel. Moreover, the people of this country are not are not abreast of its technical properties. They are not aware that diesel is a desirable fuel. We are yet to come out with a resolution with the stakeholders.

Could you talk a little bit about the National Automotive Board (NAB)? How is it going to give a fillip to the industry per se? Or is it meant to regulate the vehicle manufacturers in this country?

The genesis of National Automotive Board (NAB) is the formation of National Automotive Testing and R&D Infrastructure Project (NATRiP) where we first started to discuss on the need of harmonisation of automotive policies and developments in the other part of the world. At that time, we were mulling to form a body which will be able to support the government with technical knowledge. This is similar on the lines of Japan Automobile Standards Internationalization Center (JASIC) in Japan which acts as a facilitator between the industry and the government. So we hope NAB will be able to fulfill similar objectives.

One of the primary factors contributing to greenhouse gas emissions is the presence of two decade-old vehicles emitting noxious fumes. So what steps is your association taking for taking such vehicles off the road?

Going a decade back sometime during 2002, we came out with our recommendation on fleet modernisation wherein we have suggested that the government can offers some incentive schemes for people who could swap their old vehicles with brand new fuel-efficient ones. But such ‘Cash for Clunkers’ policy has not borne fruition. So we have to wait and watch.

The National Electric Mobility Mission (NEMM) Plan 2020 is expected to be launched by Prime Minister Manmohan Singh in a few weeks time. This was stated by Minister of Heavy Industries and Public Enterprises Praful Patel on November 26, 2012.  Will this be the turning point in the history of Indian automotive industry?

I am not sure whether it will be the turning point of the Indian automobile industry because I can’t predict whether this Plan will be successful or not. China had implemented a similar policy many years back but has not been so successful.  Having said that, the moment has arrived for us to look at vehicles that are run on alternate fuel propulsions like hybrid, zero-emission, or LPG/CNG-fired vehicles. I am happy that the government has shown their commitment to promote non-polluting vehicles. Even though we don’t have those next-generation technologies like lithium-ion batteries, it is felt that we have the excellence in software that can come into play. If Indian companies can ally with Chinese players, then we can make a substantial contribution for green vehicles.

The Heavy Minister also told journalists that his ministry was all for cutting duty on luxury cars imported from Europe as part of the proposed India-European Union free trade agreement (FTA). He said that by cutting duties it would benefit the interests of Indian small car exports to Europe. Then why is SIAM opposed to it?

No, I don’t think it is going to benefit us in large scale small car exports from this country. Even though some companies have been exporting small cars to Europe, the growth has decelerated because of the economic conditions in those countries. Moreover, the ‘Cash for Clunkers’ policy in those EU countries have been done away with.  Even though we command 60 pc on Completely Built Units (CBUs), only 6.5 pc import duty is imposed by such nations (on our CBUs).  So I don’t think the domestic automobile industry is going to benefit in a gigantic manner if the duty comes to nil on both the sides. On the contrary,  it will lead to the large scale imports of luxury cars into India as this is one of the second fastest growing economies in the world.

What measure is SIAM taking in promoting the R&D capabilities of this industry?

SIAM is running several groups and committees which are looking at ways and means to enhance our R&D capabilities. We already have a styling and design group which had organised the 6th ‘Styling & Design Conclave’ along with the 4th Automotive Design Challenge (ADC) coinciding with the Auto Expo 2012 in New Delhi. The theme for the conclave this year was Future of Design - 2020. There were senior designers from India and abroad who had shared their experiences with case studies on iconic products, effective design process and on role of design in building and sustaining brands. Moreover, every year we have been holding a conclave on styling and designing in cities like Mumbai, Delhi, and very shortly in Bangalore. This group has been trying to promote such capabilities in this country and is also in dialogue with the government to set up such design facilities. We have a technology group which looks into areas like IT and ITES applications. Moreover, a lot of work is going on for alternate fuel vehicles like hydrogen, fuel cells, etc.  Furthermore, SIAM and the Indian government have a joint working group with the German government and its industry. Our members and institutions are working overseas partners for some next-generation products. SIAM also takes sourcing delegations to other countries at regular intervals to find new technologies on new products that can enhance the performance of our products.

According to the survey done by World Health Organization (WHO), the road accidents in India have been the highest in the world. So when can we expect a stringent law to curb overspeeding, drunk driving, and low use of helmets, seat belts and child restraints in vehicles that will ultimately result in lessening of fatalities? And is it not wise to make all safety features in a vehicle mandatory like the way we have in Europe?

This is really a very sad situation. Unfortunately, we have not been able to do much on this front. We also need a very strict legislation to dissuade rule-breakers. This is despite the fact that we have formed Society for Automotive Fitness and Environment (SAFE). In order to achieve advancement of Inspection & Certification (I&C) of vehicles and increased safety on roads, this independent body has been incorporated. The problem in India is that most of the drivers in India are first-generation ones and are not that savvy about vehicles, road sense and etiquette, etc. This menace can be tackled only by forging a formidable partnership with the government, policymakers, industry players, NGOs, etc. This is because it involves a lot of resources and efforts. At one point of time, we wanted to propagate road safety through radio channels. Bit later we realised that it’s an exorbitant proposition. And to answer the second part of your question, we cannot mandate a safety technology in a vehicle. We can only recommend the standards that the members should adhere to. Let the companies take a call from their end.

How much is the Indian automobile industry contributing to the country’s GDP? And going forward, what will be its contribution?

When we started delving deeper into the numbers in 2005, the industry’s contribution was merely 5pc. We were aiming for a 10pc contribution by 2016. But seeing currently growth in sales, it appears that the target may be unachievable. That is the reason we have approached the government and stated to them that the AMP may have to be extended beyond 2016.  So we have requested the Minister of Heavy Industries to look at the possibilities for extension to 2026.

Lastly, what is your vision for SIAM? Where do you want to see this industry by 2020?

SIAM intends to contribute to the society in a comprehensive manner. We would like to generate further employment opportunities in a holistic manner. By 2020, I think that the Indian automobile industry will be quite matured and in a better shape. Today, only a handful of companies are operating at economies of scale. We look to make the environment suitable and many more companies to grow and become self-sufficient that will enable them to achieve economies of scale. We are now already one of the top seven markets in the world and in eight years our rank will go many notches higher.