India's booming automobile industry may be a crucial driver of economic growth and pose a serious threat to manufacturers in many developed nations, but a new study has revealed that the country's automakers are plagued by several challenges.
The study, released on Monday by IBM and the Transportation Research Institute of University of Michigan, notes that Indian automakers are plagued by a shortage of skilled workers, inferior quality and inadequate highway infrastructure, among other obstacles, in pursuing global ambitions.
The Indian car market still remains in a fairly primitive stage of development, The New York Times reported, quoting the authors who interviewed 30 high-level executives and automobile experts in the country.
However, according to the study, the Indian auto industry will surmount the impediments to make India one of the world's top ten vehicle-producing countries by 2015.
"Roads are the big problem. The infrastructure needs to be improved more than you might think. There're a number of problems, but they're aware of them and they know what it takes to overcome them," Allan Henderson, senior managing consultant of the IBM Institute for Business Value, said.
Sales of passenger cars in India have more than doubled since 2002, according to the Society of Indian Automobile Manufacturers, which represents 38 makers of vehicles and engines. Passenger vehicles have nearly quadrupled in the period but still were less than 200,000 in the last 12 months.
Future growth could be limited, however, by too few engineers and skilled workers. Although India is known as a home of plentiful low-cost labour, many workers do not have the qualifications that automakers desire.
"It was almost unanimous amongst the interviewees that this is a challenge they need to work on," Bruce M. Belzowski, senior research associate in the Transportation Research Institute's automotive analysis division, said.
"We were under the impression, as most Westerners are, that India is an almost unlimited source of labour," he said.
Even if carmakers are able to increase production, the study says that many consumers do not want to buy the products because Indian roads are in poor shape and very congested.
"Motorcycles and other two-wheelers are the most popular form of transportation, outselling four-wheeled vehicles four to one," it says.
Exporting is troublesome as well. Indian automakers have difficulty understanding foreign consumers, developing a range of models, managing global supply chain logistics and incorporating advanced technology, the study states.
"They're not ready for full-scale exporting," Belzowski was quoted as saying by the daily.
However, the country's automakers do have several important factors working in their favour: The Indian government is solidly behind their efforts, even drafting an aggressive mission plan for the industry, and Indian consumers generally want to buy vehicles made in their own country to support the economy.
