AUTOMOTIVE SECTOR
Automotive Industry Set for Global Competition
The growth in Indian Automotive Industry has grown at a CAGR of over 14%. The size of the automotive sector in 2008-09 was estimated to be around `1,910 billion. It is expected that an additional 2- 2.5 million employment opportunities per annum will be created in the next decade By Vishnu Mathur
T
he liberalisation of the Indian industry saw significant growth in the Indian Automotive Industry. Today, the Indian Automotive Industry is a significant contributor to the Indian economy, contributing nearly 5% to the country’s GDP and about 17-18% to the kitty of indirect taxes to the Government, while investment outlay stood over `83,500 crore in 2008-09. The evolution translated into a clustered growth owing to high dependence of the industry on integrated supplier network. The nucleated growth further gained support from favourable policies of those particular States wanting to promote industrialisation in their respective regions. As a result, certain key
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centres of production with high concentration of Auto-Original Equipment Manufatures (OEMs) and Auto-component manufacturers emerged, namely Pune, Gurgaon, Chennai and Bangalore supported by upcoming smaller clusters like Pitampur and Pantnagar. All this has been in keeping with the Government of India’s Automotive Mission Plan (AMP) 2006 - 2016 which envisaged that “India would emerge as the destination of choice in the world for the design and manufacture of automobiles and auto-components. The Output of the automotive sector would be US$ 145 billion contributing to more than 10% of India’ GDP and providing employment to 25 million persons additionally by 2016.”
Generating Employment for the Youth The Automobile segment, comprising of the OEMs, is at the topmost Tier of the Automotive Industry with a wide network of Tier I, II, III level suppliers supporting the OEMs for end product production. In terms of activity, manufacturing is the most key function in the Automobile segment, owing to nearly 60-70% of the manpower engaged in this activity at the manufacturer’s end (direct employment). Indirect employment generated by this sector is considerable as personnel are employed in functions such as sales, finance, insurance, etc. Further, the automotive landscape in India has several underlying support systems which, though not directly linked to the industry, are support areas or “enablers” of growth. Key enabler segments for the core segments of the Automotive Industry include auto insurance, financiers, mechanics, and auto dealers etc. The enabler segments are associated with providing indirect employment to personnel in the Auto Industry and employment in these industries constitutes about 60% to 70% of the total employment in the Automotive Industry in India. The automotive industry, on account of its backward and forward linkages, is a significant generator of employment both direct and indirect. It is estimated that the Indian Automotive Industry provides direct and indirect employment to over 13 million people. Demand for minimally skilled people, which includes Industrial Training Institute (ITI) diploma holders and school educated workmen is expected to be around 12~15 lakh per annum; demand for manpower at the next level – that of supervisors on the shop floor -- is expected to be around 5~6 lakh per annum; demand for engineers (B.E., M.Tech., MS), working in managerial grade, is expected to be around 2-3 lakh per annum; and the demand for executives, including engineers and doctorates, is expected to be around 0.6-0.75 lakh per annum. The annual availability of manpower from various educational initiatives (ITI, Polytechnics, and Engineering Colleges), numbering around ten thousand, is not in excess of 15 lakhs, with the maximum
AUTOMOTIVE SECTOR
number being churned out by the Industrial Training Institutes.
The Skills Gap in Automotive Sector Major skill gaps are to be found at all levels within the automotive industry today – workmen, supervisory, managerial, and executive -- but they are nowhere more glaring than at lowest level in the chain of employment. The major skill requirements will be at the level of minimally skilled and supervisors on the shop floors, the supply of which is contributed by ITIs and polytechnic colleges. In the Indian context, it is the ITIs and polytechnic colleges that impart skills in various vocational trades to meet the skilled manpower requirements for technology and industrial growth of the country. However, the level and content of vocational training in India is inadequate and as per industry estimates, the current skill gaps in the Indian automotive industry are around 70% - the skill gap includes deficiency in manpower and skills. The key reasons for skill gaps today include outdated syllabi as well as equipment and machines, poorly trained, unmotivated and uninspiring teaching faculty, and a lack of a robust regulatory and accreditation framework that allows for high standards for certification. The automotive fraternity has attempted to address the shortage of skilled manpower in recent times by various methods, including continued in-house training, the adoption of Industrial Training Institutes, partnership with engineering institutes and polytechnics in and around their plants, the setting up of technical institutes within their own plants and delivery of training through e-learning modules. However, these efforts have been geared towards meeting the immediate needs of their own growth trajectory rather than a concerted effort to root out the problem that plagues the collective. The automotive market is on the cusp of a seismic shift in vehicle technology. As the global car park doubles to one billion over the next 15 years, market forces and consumer preferences will drive vehicle innovation that will dwarf
the changes over the previous three decades. These changes are occurring across all areas of the vehicle, from powertrain through to electronics and driver-assist systems. While manufacturers and suppliers continue to push new technologies to gain a competitive advantage in the marketplace, consumers are increasingly looking for refinement of the driving experience. Unfortunately, the Indian vocational system is yet to adopt these technology developments and impart skills on them. In this changed manufacturing environment, the skill gaps that exist today will become all the more pronounced
At the national level, SIAM is a member of the National Skills Development Corporation (NSDC), floated by the Union Ministry of Finance with a corpus of Rs.1,000 crore, aimed at enhancing the skills of students to meet the growing demand for efficiency in industry. ASDC proposes to complement the existing vocational education system and address the skill gaps through several activities including: • Conducting research – Building up skill inventory database for the Indian automobile industry skill-wise region-wise, reviewing international trends in skill development and
Auto Industry and employment in these industries constitutes about 60% to 70% of the total employment in the Automotive Industry in IndiA. the current skill gaps in the Indian automotive industry are around 70% - the skill gap includes deficiency in manpower and skills and the Indian auto industry is expected to face severe shortage in manpower, both in terms of numbers as well as in the quality of the personnel employed, especially in terms of knowledge and skills which is not appropriately matched to the requirements of the automobile industry in India.
SIAM’s Role in Addressing the Challenge The current trend has led to the automobile and component manufacturers and the automobile dealership fraternity to deliberate on means and ways by which to address the problem of skilled manpower shortage. The industry realises the criticality of skill development for the automotive industry and both Society of Indian Automobile Manufacturers (SIAM) and Automotive Component Manufacturers Association of India (ACMA) have formed Human Capital Groups to evaluate how industry could participate in skill development initiatives.
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identifying skill gaps and technology to be taken up for teaching. Improving the delivery mechanism –Updating existing modules, developing new modules and partnering with educational institutions to train trainers and upgrade skill sets of existing industry employees, dealers, mechanics and drivers. Building quality assurance – Setting up a robust and stringent certification and accreditation process for Indian automotive skill development institutes to ensure consistency and acceptability of standards. \\ Author
Vishnu Mathur Director General, Society of Indian Automobile Manufacturers (SIAM)
digitalLEARNING / march 2011
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