The Indian automotive supply chain is about to enter a dramatic phase with the regulatory demand of Bsvi engines by 2020 and mission electric by 2030. the industry is facing new logistics trends, automation and on-time delivery demand amidst lower inventory models, while infrastructure support is undergoing a sea change.
The Indian auto industry is a major contributor to the Indian economy and has pipped Germany in becoming the 4th largest auto market in the world with sales increasing 9.5 percent year-on-year in 2017. Two-wheelers dominate the industry and made up 81 percent share in the domestic automobile sales in FY18.
The industry vertical is a significant contributor to the overall Exim trade. Automobile exports grew 26.56 percent during April-July 2018. It is expected to grow at a CAGR of 3.5 percent during 2016-2026.
In the fast-moving international automotive industry, timing is key. Thousands of parts have to be delivered every day to keep production moving, and finished vehicles have to be at the right place and at the right time always. With the new regulations in place to shift from current BS IV engines to BS VI engines by 2020, the industry has to get ready to meet the supply chain requirements. New engines mean new costs and the vehicle manufacturers are investing in the technology to deliver, as per the new guidelines.
Commenting on the new BS VI engine rule, Prasad Dharmadhikari, Head Strategic Sourcing & SCM, Kirloskar Oil Engines Ltd (KOEL), said, “Currently, we need to manage the running supply chain. We also need to start working on new product development. We should ensure that standard parts are used.”
Automobile industry will contribute towards 12 percent of country’s total GDP along with its contribution in government’s ‘Make in India’ initiative. India is way behind in lithium and cobalt reserves which is essential for EVs battery production. Moreover, GST is 28 percent on these import items. There is a need for financial incentives and lowering of import duties on components that go into EVs. Indian Space Research Organisation (ISRO) uses one of the best battery systems available to power satellites, and the PM urged other companies to partner with ISRO to develop cutting-edge battery tech for EVs. India’s auto industry has a potential to generate up to $300 billion in annual revenue by 2026, creating 65 million additional jobs.
Pune is hailed as the Detroit of India and Chakan is one of India’s largest homes for global automotive players. Over 60 percent of APM Terminals' customers at Chakan is part of the automotive industry. Ajit Venkataraman, managing director, APM Terminals Inland Services South Asia, said, “By virtue of this proximity, the Inland Container Depot (ICD) cum warehousing facility at Chakan is instrumental in enabling Just in time(JIT) and Just in Sequence (JIS) – the foundation for efficient operations for automobile manufacturers as well as global Original Equipment Manufacturers (OEM) suppliers. The resultant five to six hours reduction in dwell time in this JIT modelled industry is significant.”
Apart from this, APMT’s CFS in India’s second largest auto hubChennai is also strategically located on the National Highway to cater to shipments connected to multiple ports, especially Chennai and Ennore Ports. “An easily manageable customized supply chain for both Completely Knocked Down (CKDs) and Completely Built-up Units (CBUs) and assurance of safety and security, enable our customers to experience enhanced efficiencies,” said Venkataraman
He further highlighted, “Pilferage is a major concern area for our global customers and our global standards of safety followed in our operations easily address the same. Furthermore, a liability-free, store-door product offered in partnership with shipping lines reduces the cost of operations for the automotive industry.”
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November - December 2018