Tata Motors, one of the leading passenger and commercial vehicle maker spent Rs 15,339 crore on R&D operations in FY2022. This is amongst the highest in the Indian automotive space. To give into context, the company spent 5.5 percent of its overall turnover. And it is quite comparable to the developed markets, where the average R&D expenditure is in the range of 5-7 percent.
It is important to understand that when it comes to spending on R&D, Indian companies for long have been considered laggards but the past few years, things have started changing.
Looking at the Indian automotive industry especially in the passenger vehicle segment, while the initial days saw dominance of global MNCs, the Indian OEMs have started taking the competition to a whole new level.
For Tata Motors’ the passenger vehicle segment has been an area of constant improvement. While the company had lost a lot of turf to other players, it began a new product offensive under the Impact Design in 2016, which was followed by Impact Design 2.0 in 2018. The investment in design would mean nothing, unless it was backed by a new range of vehicles which were technologically loaded to meet or beat the competition. This is where the company’s focus on investment made sense.
N Chandrasekaran, Chairman, Tata Motors in his comment in the company’s annual report said, “Recent history has been relentless with the global pandemic, military conflict, growing inequality, supply chain shortages and more. Decades of experience has been squeezed into two dizzying years. Businesses have had to cope with this unprecedented sequence of events with speed and agility. While these changes have had a serious impact on businesses and communities, they have also accelerated some important trends for the future viz. i) Energy transition – irreversible move to green mobility, ii) Supply Chain Transition – rebalancing of supply chains to become resilient, iii) Digital transition – Artificial Intelligence and Machine Learning becoming mainstream and iv) Talent transition – coming of age of the Talent Cloud – a diverse, inclusive, global talent pool that can be accessed remotely.”
As is the case of global megatrends, the move towards sustainability is the only way to achieve a healthy future. Chandrasekaran highlighted that “The shift to sustainable mobility is irreversible and the Tata Motors Group will be amongst the leaders of green mobility globally as we target Net Zero emissions (Scope 1, 2 and 3) by 2039 for Jaguar Land Rover 2040 for PVs and 2045 for CV and actions are already underway to deliver the same.”