Despite the central government ushering in reforms, the manufacturing sector is yet to see enhanced growth rates as officials in the states continue to function in a way they used to during the “licence and control days”, Maruti Suzuki India Chairman RC Bhargava said.
Speaking at an event here, the veteran industry leader noted that the central government over the last nine years has been bringing in a series of reforms and improvements in the business environment.
He noted that the country has seen massive improvement in the rankings when it comes to the ease of doing business.
Besides, the government has also abolished over 1,000 old acts while initiating a lot of reforms in taxation as well, Bhargava said.
“All designed to make it easier to do business in India, and to be more competitive in manufacturing. Unfortunately, the results are not yet apparent,” Bhargava said.
He noted that the bulk of the interaction of manufacturers and entrepreneurs is with the state government officials.
“And in the state governments, the bureaucracy and the entire administration has still not changed the way the central government has changed,” Bhargava said.
He further said: “And there are lots of delays. Time is not a factor which is valued highly by most people in the states. And the attitude of administration is very much similar to what it used to be in the licence and control days, that the job of the bureaucracy the job of the civil servant is to control rather than facilitate.
Besides, the entrepreneurs are also largely maintaining the mindset and practices which were developed during the licences and control period because in those days the private sector was not in a position to grow in any way or innovate because the licence laid down every condition of their functioning, Bhargava said.
“Now, that resulted in various malpractices developing.. you’re all aware of the growth of black money in the country. We are all aware of what black money growth means in terms of ostentatious consumption,” he added.
He further said: “So as long as the system continues where entrepreneurs, businessmen are more concerned about showing off their personal wealth and generating personal incomes and are not so much focused on growing their companies. I’m afraid the growth rates will not work..
Citing the example of Maruti Suzuki, Bhargava said the company grew at a time when all the conditions were unfavourable.
He noted that despite improvement in the ease of doing business in the country, the growth of the manufacturing sector is still about 5 per cent a year.
“We need to get up to 12 per cent a year. That’s the kind of change which is needed and it cannot happen unless everybody involved in this business, whether it’s people who are vendors, people who are dealers, people who are entrepreneurs, people who are large industrialists, they all decide that our first priority is to grow our companies not our personal wealth,” Bhargava said.
He noted that Prime Minister Narendra Modi had pointed out in 2014 that if the country wanted to solve major issues like poverty and unemployment in the country the manufacturing sector has to grow at a higher rate.
“If we are going to have greater equity in our society, all of this would only be possible if the manufacturing sector grows faster, and we reach at least 25 per cent of the GDP through the manufacturing sector,” Bhargava said.
On the domestic car industry, he noted that India is now the biggest growing market in the world.
There is no other country in the world of any size, which has the potential for growth in the car market, which India has, he noted.
Whether it is the US, Europe, Japan or China, all these countries have now become saturated, Bhargava said.
“India is the only country which still has a lot of distance to go before the market becomes saturated. And it is for this reason that in the last 15-20 years, almost every car manufacturer in the world has found his way into India, and those who haven’t come are still looking to come now,” he stated.
So the Indian car market is going to be a growing car market and equally it is going to be a highly competitive car market, he noted.
Companies have to work to bring the best of technologies, the best products, the greatest reliability in the products, and the best of after-sales service, Bhargava said.
“That’s what Maruti has been trying to do all these 40 years. That is what we will continue to do. And we will continue to see that we make our best efforts to keep a large part of the market under our control,” he added.
On the company’s plans to introduce electric cars, Bhargava said the company plans to bring in six models over the next few years in order to keep its market share intact.
“If we are to keep 45-50 per cent of that market. You can’t do it by having one or two models. You need to have a large number of models..six models we feel is the minimum that we require.
He further said: “Even with six models, we think that by 2030 only about 15-20 per cent of our sales will be electric vehicles.
Maruti Suzuki plans to launch its first battery-electric vehicle by 2025.
Bhargava said the company was first trying to convert WagonR into an electric car..
The conversion happened but the company realised that the cost of the car was coming out to be so high that it would not be a viable proposition, he added.
“And that is why we gave it up and said that now let’s look at developing a bigger model because the lower car segment is not such as could be converted to electric operations and still remain within the affordability region for customers of that car,” Bhargava said.
By the time the company enters the electric segment there would be the possibility of reasonable volume being sold in the market, he said.
