India can beat China in low cost manufacturing, says Maruti Suzuki Chairman

Maruti Suzuki Chairman RC Bhargava has recently noted that India can beat China in low cost manufacturing if industry and government work together. Mr. Bhargava made these comments at an online event, organized by All India Management Association (AIMA).

Maruti Chairman Rc Bhargava Featured

Meanwhile, this is what he said at the online event,

India has the capability to become a lower cost country than China if the industry and the government work together in a cohesive manner. The government must focus on increasing competitiveness of Indian industry. The more the industry can sell, the more jobs will be created in the economy. Reserving jobs in manufacturing jobs for locals by state governments is an anti-competitive step (in a criticism of the Haryana government’s move to reserve jobs for locals). 

Many state governments across India are in the process of passing legislation that favours employment to locals from within the state rather than migrants coming from other states of India. This could be a counter productive move according to Mr. Bhargava as it could limit free flow of talent across the country. On the other hand, many politicians and experts feel that such a move could lead to a more balanced development of states across the country. Currently, manufacturing is concentrated in the Southern, Northern and Western parts of India, leading to imbalanced growth. This imbalanced growth is leading to some parts of the country industrializing while other parts are falling behind in various development indices.

Maruti Suzuki is India’s largest car maker that holds nearly 50 % market share despite increasing competition. Apart from selling its range of small, fuel efficient cars in India, Maruti Suzuki exports cars to emerging markets around the globe. Maruti Suzuki has three main production facilities in India, at Gurgaon and Manesar in Haryana, and one more at Hansalpur, Gujarat. These three factories give Maruti Suzuki an annual car making capacity of over 12 lakh cars.

Maruti Suzuki directly employs over 40,000 people, and provides indirect employment to many lakh people. Maruti Suzuki’s cars are highly regarded for being reliable, fuel efficient and affordable. Resale value is typically high, and finding parts and service across the length and breadth of India is easy. In fact, Maruti Suzuki has the best aftersales service in India – a big factor that drives car sales.

Over the past one year, the Indian government has renewed a push for locally made products, as a counterbalance to Chinese imports and the ongoing threat to the economy from the raging Corona Virus. The tense standoff at the Indo-China border, Ladakh is another factor that has prompted the Indian government to push for more self-reliance in manufacturing. China is the manufacturing powerhouse of the world, and is known as the world’s factory. To make India replace China as a manufacturing powerhouse, the government here needs to do a lot more in terms of reforms.