The Indian Component Industry is Progressing; But is it Progressive?

A few days back I was participating as a panelist in a group discussion jointly organised by Rothschild and SupplierBusiness. The other men around the table were some of the top guys and promoters of leading mid-size auto component manufacturers. Also chipping in with his expert opinion was Thomas Kästele, one of Rothschild's wise global automotive guys.

It was a friendly discussion about things – no PowerPoint presentations to spook you, no stiff upper lips – just a brain-storming session where the plan was to sip tea and exchange jokes, pretending to be serious about business. Frankly, a cup of tea and the stock of one-liners do not last long and we did end up exchanging a lot of ideas. More than anything, it was a good opportunity for me to interact with some of the leaders of the industry and get an inside view of things.

It was also an interaction that busted a few myths for me. Myth number one – Indian component industry is looking for global acquisitions. Out of the three industry participants in the panel, one did not believe in acquisitions, one was skeptical and one only wanted to go for the low hanging apples. Maybe it was too small a sample size, very easy to go wrong there, but this sure did not come across as the fearless Indian component industry that the media has been glorifying. The general consensus amongst this particular group was that acquisitions are not that essential.

But it did not stop here. One of the participants, the promoter of a diversified components group, was more confident in his people management skills. It looked to me that his group was comfortable as long as the technical know-how came from a global player while his team did the day-to-day management. His opinion, to me, echoed the opinion of a large number of family run supplier groups across India.

The country's component manufacturer community is happily extracting the maximum out of the low cost advantage enjoyed by the country. But thanks to economics, cost as a competence erodes with time and should be replaced by technical competencies, just for the purpose of survival. While some supplier groups realize that and are investing for the marathon, others are more concerned about the 110m steeple chase that lies ahead.