India’s decade of wheeled deities
In the period 2002-03 to 2008-09 the average annual growth rate in sales for the basic four categories of vehicles – commercial vehicles (lorries/trucks and buses), three-wheeled vehicles (that includes autorickshaws, which are short-distance transport in almost every Indian town and city), two-wheeled vehicles (that includes motorcycles, scooters and mopeds), and cars – has become the stuff of manufacturing legend.
Yearly sales growth of 17.46% for commercial vehicles, 13.51% for three-wheeled vehicles, 25.69% for cars, and 10.97% for two-wheeled vehicles have turned India into a market which has the potential to become a US$145 billion auto bazaar by 2016, say the Automotive Component Manufacturers Association (ACMA), the Confederation of Indian Industry (CII) and the Society of Indian Automobile Manufacturers (SIAM) who have jointly organised the expo.
These are the numbers that have caused every single major automaker from anywhere in the world to descend on New Delhi. Ten years ago, in 1999-2000, auto factories in India had made 574,000 cars – in 2008-09 the annual figure is 1,620,000. In ten years the number of commercial vehicles built has more than doubled, from 299,000 to 635,000. In ten years the number of two-wheelers built has more than doubled, from 3,778,000 to 8,394,000.
“Why India?” asks the promotional literature of the Auto Expo, and the organisers (supported by the Government of India and representing too the interests of the global auto giants) smugly provide the answers: “India is the second largest two-wheeler market in the world”, “Fourth largest commercial vehicle market in the world”, “Eleventh largest passenger car market in the world, and expected to be the seventh largest by 2016”
There are twin reasons for the rise of the Indian automobile bazaar. First, since 2006, globally the automobile industry has suffered what it plaintively calls “severe demand shock” on account of the economic slowdown and credit crunch in western markets (OECD + North America).
The drop in demand for 2008 and 2009 has been 38% in the US, 18% in Europe and 13% in Japan. In contrast the Indian passenger vehicle market maintained its demand during 2008-09 and is rising sharply for 2009-10. This is why most of the big names in the global automobile industry (GM, Toyota, Ford, Hyundai, Suzuki, Honda, Skoda, Volvo, Mercedes Benz, BMW, Volkswagen) are planning what industry analysts call “significant capacity build-up for the Indian markets”.
The triumphant notes being sounded by the automobile czars in New Delhi ignore entirely India’s worryingly uneven and imbalanced sectoral distribution of ‘growth’. What the comprador media calls “the India growth story” has only marginally touched agriculture, with evidence that over a prolonged period starting in the early 1990s, the per capita output of foodgrains was on the decline for the first time in the country’s post-Independence history, as economist C P Chandrasekhar has pointed out. Around 55 per cent of the increment in GDP over the last decade has come from the services sector, and just less than half of that contribution was due to an expansion of organised services, public administration and defence.
This gigantic exercise in furthering the cult of the car in India is underwritten by the Government of India. The industry has as its guidebook the ‘Automotive Mission Plan 2006-2016: A Mission for Development of Indian Automotive Industry’. This is a policy document from India’s Ministry of Heavy Industries and Public Enterprises which says, clearly and unambiguously in its ‘vision’ statement: “To emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$145 billion accounting for more than 10% of the GDP and providing additional employment to 25 million people by 2016.”