The Last Word: India is the Train to Catch
April 25, 2008
“As it neared the top of the grade, which had so discouraged the larger engines, it went more slowly. However, it still kept saying, ‘I--think--I--can, I--think--I--can.’ – Watty Piper, The Little Engine That Could, 1930.
The Little Engine That Could is being played out in a very real way in today’s manufacturing world. As most of us pay attention to the largest players in the automotive industry, one smaller automotive manufacturer, in a largely ignored part of the world, is demonstrating that it is the company that bears watching.
Tata Motors Ltd. first grabbed worldwide headlines in January when it unveiled its Nano. This “car,” which the company admits is more of a glorified scooter, captured the imagination of the world because of its low price ($2,500) and the story behind its origin-the chairman of Tata reportedly saw a family of five riding home through the rain on a scooter and thought there had to be a better solution. It also caught the attention of other, larger car manufacturers. Toyota and General Motors both announced they would investigate the feasibility of creating a similar vehicle for the market.
In March, Tata announced it had purchased Jaguar and Land Rover, from Ford Motor Co., for a combined U.S. $1.7 billion, almost a third of what Ford paid for these brands more than eight years ago. This news is welcome as it is widely expected that Tata will invest heavily in developing Jaguar and Rover to compete with brands such as BMW AG.
Investigating Tata Motors further (www.tatamotors.com), one finds this India-based company is far bigger than one might imagine. They manufacture an extensive line of passenger cars, utility vehicles, trucks, buses and defense vehicles for use in India, as well as for export. The company had revenues of U.S. $7.2 billion in 2006-2007 and is emerging as a global player.
Tata Motors is simply one success story in a chain of many more successful India success stories. Similar success stories are leading to a larger role in the global marketplace for India. Long overlooked because of the dominance of its neighbor China, India holds more promise for U.S. manufacturers.
At a recent meeting held in the Washington, D.C. area, U.S. business leaders heard some of the U.S.-India business opportunities that exist, and learned of the potential for India’s continued growth. Whereas China still presents many obstacles to U.S. manufacturers-language, culture, government, social policies, intellectual property rights, etc.-that may make it difficult to fully realize the potential opportunity that exists there, India promises a friendlier environment to U.S. companies.
The official language for business is English. The government is the world’s largest democracy, legal rights exist for foreign companies that locate and manufacture in India. The workforce is well-educated. India is a powerhouse when it comes to economic growth. India has the second largest population in the world with 1.12 billion people. India has a gross domestic product of U.S. $4.72 trillion, the third largest purchasing power in the world; and with a real 2007 economic growth rate of 9.7%, it is the fastest growing economy in the world.
Of course, India has hurdles to overcome. Not all of India’s states have the necessary infrastructure to support manufacturing. Industrial privatization is a recent development in India, so some states are further ahead than others in welcoming entrepreneurs and established companies. There is still much poverty, and illiteracy exists. However, just as with China and other nations, it is hoped that as the nation moves ahead economically, many of these problems can be aggressively addressed.
In Watty Piper’s children’s book, the “little engine” didn’t get the attention or accolades that the strong or shiny new locomotives received-the little engine was an afterthought. Only when it reached the summit and succeeded, did it get the attention it deserved all along. India is poised to reach the summit in the global marketplace; make sure your company is one of the rail cars it is pulling along.
Have experience in India? Share your thoughts with me at williamst@ qualitymag.com.