6 Months agoIndia is organising a two-day event in Stockholm, with the aim of exploring further synergies between Indian and Swedish companies. In the run up, take a closer look at collaborations in the auto sector.
This year, as India and Sweden mark over two decades of diplomatic ties, India is organising a two-day event at Stockholm with the aim of exploring synergies and avenues of partnership between Indian and Swedish companies. In the run-up to this event, we take a closer look at the collaborations in the automobile sector.
INDIAN AUTOMOTIVE MARKET OVERVIEW
The Indian automobile market is growing steadily with an impressive growth trajectory in sales, production and exports over the past few years. With an average production of 24 million vehicles annually and generation of employment for over 29 million people, India’s automotive sector is the fourth largest in the world.1
The country’s ‘Make in India’ initiative aims to transform India into a global manufacturing powerhouse. In the case of the auto sector, the Automobile Mission Plan 2016-2026 envisages to elevate India as one of the leading three markets in the world by 2026. The pace of growth for the sector is expected to be catalysed by increasing investment in the form of FDI.2
Production, Domestic Sales, and Export Trends
AUTO COLLABORATION ON A FAST TRACK
Mutual economic cooperation in the automobile sector has been the backbone of Indo – Sweden relations. The sector that has received the maximum share of investments in India is the auto sector, which constitutes 33% of the total share. The Volvo Group, one of the world’s biggest multinational manufacturing companies based in Sweden, was the first to establish their manufacturing plant in India.3
Volvo India Private Limited was established in 1998 at Hoskote near Bangalore, with an investment of USD 70 million. Today, the plant operates over 1,000 units in a one-shift capacity. The company introduced its first truck model in 1998, after which the first bus model was unveiled in 2001. The company also established a Volvo bus factory in 2008 and has expanded its footprint by 100% in 2013.4
The company currently has manufacturing setups in Hosakote, Peenya, Bengaluru in Karnataka, and Pithampur in Madhya Pradesh supported by 3,500 employees in addition to 400 sales and services personnel. It has also diversified its presence in India spanning commercial vehicles, construction equipment and financial services.5
Similarly, in 2013, Scania started its operations in India with a plant in Bengaluru. The facility can produce 2,500 trucks and 1,000 buses annually. The company is the world’s leading manufacturer of commercial vehicles. Scania’s heavy trucks, buses and diesel engines are known for their quality and performance. The Sweden-based Corporation aims to make India an export hub as their product range grows stronger in India.6
Recently, Swedish Auto OEM, Clean Motion launched its ‘Zbee’ electric commercial vehicle in India. Though currently imported as a knockdown kit and assembled locally, the option of setting up a manufacturing unit in India is currently being explored. India’s Faster Adoption and Manufacturing of Electric vehicles (FAME) policy envisages support for development of a vibrant hybrid vehicles market and for setting up of a robust manufacturing ecosystem by 2020.7
INDO - SWEDISH TRADE SYNERGIES
India is Sweden’s 19 th largest export market globally and 3 rd largest trade partner after China and Japan in Asia, with bilateral trade passing the USD 1.9 billion mark during 2016-17. Sweden has always been known for innovative technologies, while India is an emerging market and is gradually moving up the ladder. Synergy between the two nations is likely to enhance the cooperation in the sector and broaden the horizon.8
The automobile industry in Sweden is predominantly marked by exports, with more than 85% of the passenger cars and 95% of the heavy vehicles being sold outside of Sweden. To explore a range of developing economies and cater to their rising demand, India can serve as a base for the production and export of these vehicles. This collaboration will help Sweden to spread its wings to other economies, while India will benefit in fulfilling its domestic demand and generating employment.9
Furthermore, India presents a range of opportunities for Swedish automotive suppliers. Through existing relations with Swedish OEMs, the Indian business ecosystem aims to give prospective companies a window of opportunity to make their localisation simpler. Also, through innovations and simplification of production processes, there is an opportunity to offer a distinctive product by offering higher quality and performance.
To know more about Indo-Sweden collaboration in automobiles and beyond, follow the action on social media using #IndiaInStockholm
3 Embassy of India- Sweden & Latvia
7 https://www.autobreakingnews.com/2017/04/swedish-electric- three-wheeler- brand-zbee- enters-india/
8 Embassy of India- Sweden & Latvia
9 The Economist Intelligence Unit