The automotive sector is looking to generate nearly USD 300 billion in terms of annual revenue by the year 2026, increasing its share to more than 12 per cent to the gross domestic product (GDP) of the country. Together with this, it would be able to create over 65 million jobs, as per the Automotive Mission Plan 2016-26 [i]. As per the Mission Plan document, India’s automotive industry is projected to touch over 70 million units in a year by 2026, helping the country get into the league of the US and China. It would also be one of the driving forces for ‘Make in India’ initiative taken up by the government in the country.
However, along with the growth in the Indian automotive industry, demand for better safety measures has also seen a remarkable increase over the last few years in the country. In fact, consumers in India and ASEAN countries are also looking at safety innovation as purchasing criteria, found a survey by a leading consulting firm, which saw an increase from 42 per cent in 2013 to 74 per cent in 2015.
A roadmap is being planned by Government of India in the next decade which would lead to vehicles and auto components manufacturers, to comply along-side the global standards for safety. This would be in accordance to World Forum for Harmonization of Vehicle Regulations.
In the draft Road Transport and Safety Bill, the Government has proposed setting up Bharat New Vehicle Safety Assessment Programme – BNVSAP. Under this program, cars would be tested for safety for front-on and side-on crash tests. Additionally, cars which are being sold in the country currently would also have to adhere to the basic global safety measures. Along with other safety measures, cars would have to be equipped with seat-belt alerts, child lock and anti-lock braking system – these are now going to be compulsory.
Apparently, cars would also get star rating which would be in sync with the safety norms. The Government is setting up an administrative body under BNVSAP that would have the authority to choose new vehicle models for assessing them on the compliance issues. The star rating is going to be mandatory for any new models which would be launched in India. With that, voluntary star rating for old and new models would be also undertaken/allowed.
By the year 2017, India would get approximately seven centres for carrying out all safety tests. This also includes side crash test.
SIAM – Society of Indian Automobile Manufacturers – called for the Government to initiate single set of emission norms for the country. This would help simplifying operations for car manufacturers who would then have the opportunity to sell the same car across majority of states in India.
Uniform norms would definitely help the manufacturers in conducting their business in a seamless manner going forward.
Almost all the manufacturers in the country – selling vehicles in cities – follow Bharat Stage IV norms which is equivalent to Euro IV controls. While in the smaller cities, they follow Bharat Stage III norms. The Government has announced in the earlier part of this year that by April 1, 2017 cars that would be sold in the cities should meet Bharat Stage IV norms.
Industry analysts opine that the Government might be looking at adopting strict BS-VI norm, which is equivalent to Euro-VI, and this would place the country India at par with global economies of the world.
Some of the industry experts also state that if the Government is planning to skip BS-V and move towards BS-VI norms directly, it would be an increase in just three years time slot. But, this would definitely increase the price of the commodity in the market that might not be a recommended effort.
With this, refineries in India have now agreed that they would be to provide BS-V compliant fuel by the year 2019. The Government might now be looking at announcing the volumes and predicting the quantity the refineries would be providing for BS-V compliant fuel.
Additionally, Ministry of Transport is also focusing on adopting bio-diesel as well as ethanol as an alternative fuel. This would definitely help in curtailing cost and help in reducing oil import bill.
Companies that are largest airbag suppliers such as Autoliv Inc, TRW Automotive Inc, Takata Corp, and Toyoda Gosei Co are now planning to set up plants in India. They are looking at increasing their capacity in the country, as the nation is able to provide USD 2 billion opportunity due to stringent rules for improving road safety in India. These changes would also create opportunities for safety equipment manufacturers as cars that do not have airbags would only get lowest safety ratings after passing through the test [v].
It has been predicted that by the year 2020, the overall revenues from the sale of airbags from the country would rise by 11 per cent in a year and would touch USD 2 billion, which would be higher than China’s growth figure in the segment at 9 per cent, as per Transparency Market Research.
Some companies expanding in this segment are:
• Rane TRW Steering Systems Ltd – Air bag maker – had opened a new assembly plant in the month of August in the southern part of the country with a capacity for making nearly 500,000 units per year. They invested around USD 2.7 million.
• Toyoda Goesi Minda India, which is a joint venture between Uno Minda and the Japanese company, is now planning to increase the capacity by six times to touch 150,000 air bags in the next two to three years.
In addition, India would be third largest market for cars by the year 2020. Car sales were high in the month of September – higher by 9.5 [vi] per cent – with new vehicle launch and the economy now getting into a recovery path. Sales of vehicle are expected to grow by nearly 6-8 per cent by the financial year March 2016.
The present Government at the center is committed towards increasing road safety and is looking at an ‘accident-free India’. As India now accounts for one of the highest numbers of road accidents in the world – wherein, 0.5 million road accidents in a year are recorded with 0.15 million fatalities, the Government is pledging to reduce road accidents by at least half of the current figures [vii].
In order to make Indian roads safer, the Government will implement stringent regulations over the next few years, making them in line with global standards practiced worldwide. For automobile companies planning to expand their footprints or making a market entry in India, it is imperative to keep a close watch on the changing regulatory environment with regards to automotive sector in the country.
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