Blog: Dave LeggettPostcard from India #2

Dave Leggett | 14 January 2004

I went to the British High Commission in Delhi this morning for briefings from some of the staff there. Heard a good overview of the Indian economy and its auto industry. The economy is basically moving along in the right direction, recording annual growth of 7-8%, helped by economic reform and liberalisation measures undertaken by the government. More needs to be done to remove red tape and bureaucracy here (still rife) but both of the main political parties (Congress and the BJP) are committed to further pro-business reform measures. Goldman Sachs has apparently forecast that the Indian economy will become the world's third largest (after the US and China) by the middle of this century, provided economic liberalisation continues. And the Indian consuming 'middle class' is said to be growing at around 17 million people a year - a solid bedrock for automotive future demand.

Where is India's competitive edge in the auto manufacturing industry? Low cost and skilled manpower is a major plus of course (average wage rates are estimated at 80 cents an hour compared with $20 an hour in the developed world). But I've also been hearing about fast-growing services and India's increasingly knowledge-based economy. That helps all industries including autos. The auto sector is also benefitting from low cost automation and the widespread adoption of lean manufacturing and batch production techniiques. The strong IT sector also helps engineering companies. That said, I get the feeling more outside investment in the Indian supplier industry is needed to bring about real modernisation. Also, infrastucture across India is generally poor and that holds back competitiveness (although there are hopeful signs that roads are getting more investment now).

What else do I have to report so far? The people here are extremely friendly and service-oriented. The poverty on the streets is at times quite shocking though. I've seen some hairy scenes on the densely packed roads, but the locals seem to know what they're doing and at least the taxis are cheap. The weather isn't quite as I'd expected - foggy and cool today. Yesterday I took a ride in a pedal rickshaw. Once was enough. I didn't feel safe with a high centre of gravity in the busy Delhi traffic (horn mania is big here too).

Later today I'm going to a CNBC India sponsored cocktail party and awards ceremony which will have a heavy automotive industry presence. Should be a good networking opportunity. I'll keep you posted in the Blog. Oh and yes, I'm enjoying the food here very much (lots of pulse based dahls with flat bread).


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