The low cost model in Indian automotive industry is here to stay. However, low cost should not be tantamount to cheap products. Chairman of TVS Motor, Venu Srinivasan, who was also CII president in 2009-10 in an exclusive interview with FE?s Ronojoy Banerjee, talks about the split between TVS and Japan?s Suzuki Motors in 2001 and what it took to make the company the third largest two-wheeler maker in the country.

India is being increasingly seen as a low cost destination. What is the potential for low cost automobiles products in the country?

Low cost is fine till the time it is not a cheap product. At TVS Motor, we look to introduce bikes that are low on cost yet provides style that a consumer would aspire to. A low cost product has to be a wholesome product meeting every consumer need.

The split between TVS-Suzuki was one of the most high profile separations in the country?s automotive history. What were the basic issues?

It was a case of two partners wanting to do different things. Hence, we had to go separate ways but the split was very amicable and the two companies still have a lot of respect for each other.

What were the main challenges for TVS post the split?

There are two main issues that arise from a break-up of a joint-venture: brand and product development capabilities. These issues had to be looked at. From developing products ourselves to setting up the entire ecosystem once again. But our relations with the suppliers continued to be strong, which was a big support.

Following this experience will TVS look at forging similar alliances in the future?

I can say that we will not enter into alliances for developing the current range of products because we already have the capabilities and the technology for the purpose. However, if we want to enter new product segments then we might look at partnerships.

How do you see the succession debate panning out across family owned businesses. That is whether to bring a professional from outside to lead the company or groom somebody within the family to take up that position?

If a family member is able then the debate does not arise hence I don’t see any contradiction in the two arguments. You find today in various such companies we have a combination of the two.

Ahead of the Budget, which are some of the key challenges for the economy?

The high inflation is obviously a concern but raising interest rates is not the solution. We must not overuse the tool. We should keep in mind that global commodity prices are rising, on top of that the various schemes announced by the government including NREGA is raising the disposable incomes in that case prices of commodities are bound to go up.

The country is currently staring at various scams from 2G spectrum to Commonwealth Games. In that context how big an issue is corruption today for India Inc?

The problems are arising because the next phase of reforms have not taken place yet since the liberalisation in 1991. The government ought to look at deregulating key sectors and have an open bidding for national resources like coal and spectrum. In the same way, we must look at factory reforms and allow sectors like multi-brand retail to open up to FDI which is going to strengthen the back end operations.