The government?s vision of making India a manufacturing hub for small cars a couple of years ago, which saw duty breaks for them, has shown the desired results. Today, after China, India is the second-fastest growing auto market in the world. Before Toyota, global manufacturers like Ford, GM, Nissan and Honda had already forayed into the small car segment. Of course, Maruti Suzuki and Hyundai are the strongest and major players in the segment. Some of the manufacturers?Maruti for its A-Star model, Hyundai for all its models, Nissan for Micra and Ford for Figo?have made India their manufacturing hub for exporting cars to overseas destinations. With rising inflation and interest rates, auto growth has been slowing in recent months, which would further accelerate all the manufacturers? plans to enter into the small car segment, which constitutes close to 70% of the country?s overall passenger car sales. No wonder, in the next one year, players like Honda, Hyundai, Skoda etc are going to come out with newer small car models. Domestic manufacturer Tata Motors has already shown its innovative skills by developing the world?s cheapest car, Nano.
While consumers will continue to have a good time with a highly developed auto market offering a range of choices at competitive prices, and state governments will vie for investments from the manufacturers for setting up plants that would fuel employment growth, there are also a few bumps ahead. Auto plants have seen the maximum number of strikes by labourers in the past two years. The top two manufacturers?Maruti Suzuki and Hyundai?have witnessed major labour troubles. Two wheeler manufacturers like Honda Motorcycles and Scooters and Hero Honda have also had a similar experience. Data shows that the majority of workers employed by the manufacturers are contract employees, whose rising aspirations are one of the reasons for labour strife. The government needs to reform rigid and archaic labour laws to solve this problem.
