Automotive Component Manufacturers Association(ACMA) has recently unveiled two state-of-the-art labs, which include a Design and a Mechatronics lab at its Centre of Excellence, based on the IIT Delhi campus in Sonipat. These two labs are going to train ACMA members in sync with ongoing industry trends and are equipped with the latest technology and equipment. The association says that in the midst of a slowdown, these labs will offer a path to improved manufacturing in India and will benefit the industry in the near future. Deepak Jain, President, ACMA, spoke to Express Drives about the ongoing slump, upcoming emission norms and a lot more.
What are your expectations from the festive season? Do you think the stimulus package given by the government will have a positive impact?
I think there is a positive sentiment. I am also thankful to the Government of India, Prime Minister Modi himself, and also the Finance Minister. They gave the assurance to the industry that all mobility options will be welcomed. They also cleared out a lot of confusion concerning the move from BS4 to BS6 and diesel-driven vehicles. We see that there is a bit more traction in the festive season, but everyone is crossing their fingers to see whether it is sustainable of not. Structural, as well as cyclical reforms, have just taken place in the economy as well as in the industry. Hence, we hope that there is some positive sentiment but we are also aware of the fact that BS6 is around the corner, so in the Q4 FY 2019-20, especially, once the festive season is over, there will be a lot of inventory management which will be done by the OEMs and we have to see how the schedules will pay accordingly and this may have an impact on the growth.
With the exception of a few, majority of OEMs are still producing BS4 models and will switch to BS6 closer to the deadline. What's the take of component manufacturers on this? Will late movers put extra pressure on component suppliers?
No, they don't. We follow our customers i.e. the OEMs. And every company will have its strategy, their launch plan. It is up to them how they manage it. From a component industry perspective, depending on the customer, we get orders. Yes, there is a concern where companies have given orders and they are not respecting those volumes and I think Q4 will see a lot of that (concern) because we have to manage the inventory as the market dynamics will be different. Hence, because of the whole issue of 1st April coming through, you will see a lot of iterations happening and I think the Indian component industry will raise alarms to certain customers if need be.
A lot of jobs, particularly those in the component sector were at risk due to the slowdown. How is the situation now? Is it stable or continues to deteriorate?
First, we need to understand the nature of the 10 lakh jobs that were are at risk. The auto industry, by law, is permitted to use flexibility in their systems and uses some temporary workforce as per need. In a downturn, you don't need that flexibility, and hence you see an impact on the same. And in an up-turn, in a similar fashion, you create a lot more jobs and you also use a lot of flexible systems.
So definitely, at the moment, there is a stop in recruitment. There are certain industries, like the commercial vehicle segment, where the jobs are still at risk, but in certain regions, there is some stability. And hence, it's a mixed bag. But the companies and margins are under pressure because of the revenue downturn leading to cost-cutting measures. No one likes to lose people, so I think the companies are not just looking cutting jobs but they are also looking at other avenues on how do they bring down there break-even points.
First the BS6, then the new safety norms and now the push for electric vehicles. Is it all happening too fast too soon?
I think we have to accept the reality. Nowhere in the world, migration such as the BS4 to BS6 has happened so fast. I would say that it is a compliment that the Government of India did make this a challenge for the industry and it is great that the industry came together and responded well to this challenge. We will see very soon how successful we have all have been on the 1st of April. The Government push is also correct because of the pollution and also because of energy security, for which you need efficient mobility. As an industry, we have always been saying, and I think the Government now accepts that we just don't need electric vehicles but a technically agnostic approach where we can see all forms of mobility functions that would lead to a better and greener environment. From our perspective, when you say "too much too soon", as I said, this is a fact. In the time frame, there are too many mandates, be it the emission norms or the safety regulations norms to come through. And yes, we have to take it as a fact that the industry is slowing down and there will be certain structural changes for that.