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Tata Motors has inaugurated its new Sanand plant in the western Indian state of Gujarat today (2 June) to produce the value Nano model.
Start of production at a brand-new plant was delayed as work was transferred from a 95% complete plant in Singur in West Bengal in 2008, following violent local protests concerning land seizures. Other plants started making the car in the meantime.
The Mumbai-based manufacturer was overwhelmed by initial demand for the Nano, whose most basic model retails at INR100,000 (US$2,100), but is now hoping to ramp up production to 350,000 units per year. Deliveries from Sanand begin this month.
"Demand for the car was somewhat overwhelming - the first 100,000 went to those people who were essentially pulled out of a lottery," A tata Motors spokesman told just-auto.
"This factory [Sanand] will come on line and ideally will be a phased increase, so eventually it will be 250,000 cars a year. Should more capacity be needed, then with some balancing, it could be expanded to 350,000 cars per year."
Given the increasing appetite and ability of Indian consumers to purchase vehicles, there could even be the possibility to widen the new plant\'s capacity more.
"In our wildest dreams, if even more capacity is needed, there is an option to expand it even further," added the spokesman.
Output, supplemented by the facility at Pantnagar (Uttarakhand), will initially fill orders from the 2009 booking process.
Built in a record time of 14 months starting November 2008, the integrated facility comprises tata Motors’ own plant, spread over 725 acres, and an adjacent vendor park, spread over 375 acres, to house key component manufacturers for the Nano.
Plant equipment includes sophisticated robotics and high speed production lines. The plant has energy-efficient motors, variable frequency drives, and systems to measure and monitor carbon levels supplemented by extensive tree planting, sustainable water sourcing through water harvesting and ground water recharging and using solar energy for illumination.
The plant has already directly employed 2,400 people. As capacity increases, the project, along with the vendor park, is expected to generate about 10,000 direct and indirect jobs.
At the vendor park, plots have already been allocated to 41 vendors with more to come. Vendors, accounting for about 80% of the value of components to be sourced from the park, have already begun construction but, in the interim, will supply the plant from existing facilities in India.
Author: Trade Partners UK
Publication Date: 12-05-2010
India is as a priority market for the automotive and auto component sector. This is as a result of a number of factors, including:
* the current high level of investment and the continued opening up of the sector to overseas companies;
* the pressure for domestic manufacturers to increase the quality of their products and processes to compete on the global stage;
* the pressing need for UK companies to take advantage of the opportunities within the sector within the next couple of years.
The Indian automotive industry is characterised by strong competition between increasingly quality conscious manufacturers. A large, highly skilled but low cost manufacturing base makes partnering linkages with overseas players attractive. However, the industry needs to continue to increase quality standards and to develop new products to compete globally. Many domestic manufacturers have already successfully entered into collaborations and others are actively seeking to do so. UK companies need to react soon.
India is fast integrating itself into the world economy and open to international automotive companies, who are increasingly investing in India. In the long term India is well placed to become one of the most interesting markets for automotive and component manufacturers in terms of local demand and as a base for export.
Characteristics of Market - General Background:
Economic liberalisation in 1991 opened the Indian auto market for foreign automotive companies to establish manufacturing bases. Companies such as Suzuki, Daewoo, Hyundai, Ford, General Motors, Honda, Volvo and Toyota have all now set up manufacturing facilities in the market. Competitive pressures and globalisation are reshaping the business and the continuing over-capacity in the domestic market is driving consolidation and strategic alliances in the industry.
Following growth of around 20% between 1993 - 1997, the industry is now experiencing a slow down across almost all segments (except the two wheeler segment). This is due partly to the overall slowing down of the world economy but domestic fiscal policies have also added to this situation. However, the industry is still expected to grow at around 10% pa. The Government is being encouraged to provide a suitable fiscal environment to enable the automotive industry to exploit its potential in terms of driving the domestic economy. However, announcements in the recent budget (March 2001) e.g. the reduction cut in excise duty were intended to encourage growth and investment in this sector. The automotive industry currently accounts for around 5% of domestic industrial output.
There is a fairly well developed component and ancillary industry with some suppliers already meeting global technical and quality standards, particularly at Tier 1 level but many other lack such competence. Pressure is on suppliers to raise the quality of their products to remain competitive. Total investment in the component industry is around $2bn (up from $1.7bn in 1996/97) with output estimated at around $3.8bn. The industry employs around 250,000 people. The majority of companies (approx 78%) are SMEs with a turnover of less than $10m. In terms of location over 70% are situated in either the northern or western regions.
The emergence of e-commerce is creating new opportunities and challenges with OEMs beginning to use web-based technology to procure components and sell their products.