'CENTRE, STATE GOVTS SHOULD WORK TOGETHER TO BOOST MANUFACTURING'

RC Bhargava, former CEO and current chairman of Maruti Suzuki, takes questions on a range of issues, from how the carmaker stayed on top and how he looks at future challenges. Excerpts from 6th edition of Delhi Dialogue, The Morning Standard

- 

The Indian automotive industry has operated without any formal planning or inclusion in government policies such as five-year plans. It is difficult to believe that a government organisation could handle the pressure of VIP demands and vehicle registrations.

Shahid Faridi: Maruti started as a joint venture and it became a private company. How and when did it happen?

The government started with the intentions that the foreign company should take 40% equity. At that time, no foreign manufacturer wanted to actually put cash into the company. The other people who were offered to partner with Maruti wanted only to give secondhand equipment, but nobody wanted to invest.

Suzuki, on its own, agreed to take 25% stake. Later they agreed to take 26% when they understood 26% gives them more rights.

Then there was a revision in the contract within five years, and Suzuki was given an option of increasing its stake to 40%. So, they went up to 40% within five years.

Then came 1991 liberalisation and we wanted foreign investments. The PMO told us to persuade Suzuki to increase its equity into Maruti and see if we could get any other foreign investment in the company.