Keeping hope afloat

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: India has come a long way since liberalisation in 1991. After initial hiccups, various sectors of industry have successfully taken up the subsequent competitive challenges via the restructuring of operations, rationalisation of resources, improved product mix, efficient supply chain management and enhanced efficiencies. Today, a large number of Indian companies are looking at global markets with increased confidence.

Currently, amidst murmurs of an economic slowdown, a debate is on among economic and industrial circles about how to meet emerging challenges and ensure that India’s growth story does not lose any of its lustre. The Index of Industrial Production estimates released by the Central Statistical Organisation point to disturbing trends. Industrial growth slid to 5.3% in January 2008, against 11.6% in January 2007. While curbing inflation may be the government’s current focus, the industrial slowdown needs to be tackled on an urgent basis, too.

While Indian external trade reforms are well on course, internal reforms have somehow lagged behind. While import duties have been brought down, much needs to be done to enhance the competitiveness of industry. Changes in the policy framework could achieve greater competitiveness, I believe, and this is the time to carry these out. Here, I present automotive tyres as a case study, and discuss how the tyre industry has emerged globally competitive—but with its global ambitions thwarted by the policy regime.

A glance at Indian roads will confirm the revolution that automobiles in India have undergone over the past 15 years. The Indian tyre industry, with as many as 43 tyre companies and 58 manufacturing plants, has kept pace with the scenario. India is among the few countries to have attained near self-sufficiency in domestic tyre manufacturing capability. All categories are made locally, from 1.5-kg moped tyres to 1.5-tonne earthmover tyres, and from rugged steel radial truck tyres to high-performance car radial and tubeless tyres. Indian tyre-makers have invested in R&D and product innovation, and have done well as OEM suppliers to the world’s top auto firms. Indian tyre exports are expanding, too, and even to quality-conscious markets such as the US and EU.