New Delhi: India’s automotive industry will fuel its industrial expansion and play a significant role in attracting investments and prosperity, according to Maruti Suzuki chairman R.C. Bhargava, who also believes the country will become a provider of automobile technology to much of the developing globe. However, despite the geopolitical benefits India receives as a result of the global diversification policy, Bhargava stated that its manufacturing industry has yet to become globally competitive.
“Today, India is the world’s third largest car market. I see the Indian car market expanding, and we are the only huge country that can grow significantly in the coming years. I anticipate India being a significant exporter of vehicles and auto parts, which are already worth more than $20 billion. In many ways, I believe we will become the innovators and distributors of technology to a large portion of the developing world’s vehicle sector,” Bhargava stated in an interview.
“The automotive sector will propel the expansion of manufacturing in India, and I anticipate that the automotive sector will play a significant role in the future as it leads all other manufacturing sectors in my opinion. It is the only sector in which all of the major global manufacturers have invested in India, and I can’t think of another manufacturing sector with as much foreign interest and investment from all of the world’s greatest companies,” he said.
The Indian manufacturing sector has yet to reach high levels of productivity and competitiveness, and Bhargava, a former government servant, warns that this needs to change, with state firms in particular needing to improve their performance. These are the themes he discusses in his most recent book, Impossible to Possible, in which he describes what led Maruti Suzuki, the first and only instance of a government-run public sector undertaking (PSU) forming a joint venture with a foreign company (Suzuki) in India, to begin manufacturing in India in a new sector by bringing in and adapting productivity principles implemented by its Japanese partner.
The leading automaker in India, Maruti Suzuki, exceeded the 2-million car mark in 2023 and plans to build 4 million vehicles by 2030.
In a 40-year partnership of trust, loyalty, and friendship that contributed to Maruti Suzuki’s success, Bhargava, 89, and Osamu Suzuki, 93, respectively, have maintained their positions as chairman of Maruti Suzuki and Suzuki Motor Corp. even after retiring from executive roles as MD and CEO. Suzuki now owns nearly 60% of MSIL after the government disinvested in Maruti Udyog Ltd in 2002. Osamu Suzuki invested ₹20 crores in the company in 1981, staking his reputation on a company that was almost ‘guaranteed to fail’, according to Bhargava. Suzuki also assisted Maruti in breaking free from the constraints of traditional PSUs and focusing on profitable expansion and competitiveness.
Bhargava stated, “Getting strategic partners who will bring in systems which will help the company grow is one way that the public sector performance can improve, and I think there’s no question that public sector performance needs to improve substantially if they are going to contribute to the country’s growth.”
“In the private sector, one example is the relationship between Kubota and Escorts, when Escorts’ management decided to bring in a Japanese partner in a company that has been family-owned for decades. This will allow them to significantly expand their business, rather than just having a large slice of a smaller pie,” he explained.
A preponderance of Western management theories may be hurting India’s industry’s ability to compete internationally, and Bhargava warns against this. “We tend to uncritically follow Western management systems, especially those in our educational institutions. But which Western countries are currently as productive and competitive as enterprises in the East? A failure to consider what is happening in the globe in terms of productivity, competitiveness, and manufacturing… would assure that we remain non-competitive in manufacturing, similar to Western countries,” Bhargava stated. Kaizen, or continuous improvement, is a crucial aspect of this Japanese management philosophy, and it can only be achieved when managers collaborate with workers in an equal partnership, according to Bhargava.
Maruti Suzuki has a cash stockpile of nearly ₹50,000 crore and achieves a 2-3% reduction in the cost of their components (not accounting for inflation) every year. This is due to hundreds of thousands of suggestions made by Maruti Suzuki’s workers, resulting in annual savings of hundreds of crores. And it is what distinguishes a good manufacturing company from an ordinary one,” Bhargava explained.
