automobile industry vision - 2025 -...
TRANSCRIPT
236
PUBLICATIONS
ISSN-2319-1058 JOURNAL OF INNOVATIONS IN ENGINEERING
AND TECHNOLOGY
AUTOMOBILE INDUSTRY VISION - 2025
B. L. Dhabhai, Research Scholar, Suresh Gyan Vihar University, Jaipur – Email : [email protected]
– Membership No :- F 1066850
&
– Dr. J.L. Sehgal, Chairman, IE(I), RSC, Jaipur
– Membership No : F 100519-3
ABSTRACT
Urban population is expected to increase from the present 28% to around 45%
by 2025. Rural population is also becoming progressive and there is a huge market for
automobiles in India. Automotive industry in India is one of the largest and one of the
fastest growing industries in the world. There are 22 commercial vehicle
manufacturers which are engaged in the production of automobiles in India. Indian
automobile market has become highly competitive today. Auto manufacturing
companies need to adopt value engineering methodologies and take policy initiatives
in real earnest to secure a competitive edge in the market, reduce manufacturing costs
& improve the quality of products. Value Engineering methodologies can serve as an
important tool to improve quality and reliability of products at reduced costs and
achieve the target costing objectives of the firm.
After the entry of M/s Suzuki Corporation in India, automobile manufacturing
industry has witnessed rapid growth since early 1980’s and by the late-1990's the
industry reached self reliance in engine and component manufacturing from the status
of a large scale importer of components and vehicles. Over a period of more than two
decades the Indian Automobile industry has experienced rapid growth driven by the
237
entry of foreign players and indigenous manufacturers with foreign collaboration.
With comparatively higher rate of economic growth in comparison with the global
powers, India has become a hub of domestic and exports business. In the recent years,
the automobile sector has been contributing around 12% share to the GDP growth in
India.
INTRODUCTION
Indian Automobile industry is bearing the brunt of economic slowdown,
today. India has a very low penetration of car ownership ,but the scenario will change
in 5-10 years and the automobile market is expected to become worlds third largest
market by 2020. The car production is expected to increase from 2.5 million cars
today, it would double to around 5 million. The society of Indian Automobile
Manufacturers (SIAM) has scaled down the growth prospects for the industry for
2012. The important factors, that drove the automobile industry a decade ago have
changed. The Interest rates were around - 7.5% as compared to around 12%,today
Petrol prices are much higher now as compared to the world markets .In India,
customers purchase cars only, when their sentiment is positive. During the last
quarter, the economy grew at 4.9% only. In this scenario consumers have become
more conservative. Lower end SUV in the Multi - Utility vehicle segment is selling
due to reasons of people movement .The remaining industry growth is almost flat,but
the market is still on the positive size. Industry plans for three to four years period.
Automobile Companies, normally plans for their investments on a long term basis.
Although, lower sales are upsetting the industry. Yet the growth prospects are
expected to improve in the long run .Companies are creating higher value products
for the customers with attractive features and financing facilities,today and are
exploring different segments and products in smaller cars and SUV’s. Most of these
products sales are growing on the back of diesel offerings.
Urban population is expected to increase from the present 28% to around 45%
by 2025. Rural population is also becoming progressive and there is a huge market for
automobiles in India. Automotive industry in India is one of the largest and one of the
fastest growing industries in the world. There are 22 commercial vehicle
manufacturers which are engaged in the production of automobiles in India. Indian
238
automobile market has become highly competitive today. Auto manufacturing
companies need to adopt value engineering methodologies and take policy initiatives
in real earnest to secure a competitive edge in the market, reduce manufacturing costs
& improve the quality of products. Value Engineering methodologies can serve as an
important tool to improve quality and reliability of products at reduced costs and
achieve the target costing objectives of the firm.
Population in all big cities is increasing year on year . Delhi population stands
today at more than 18 million . The number of vehicles plying on Delhi roads is
increasing continuously . Majority of street roads are lined up with vehicles parked on
both sides of the road, with the result that movement of vehicles is restricted even on
wide roads. The majority of population does not own cars or any motorized vehicle .
Pedestrians will find it increasingly difficult to survive on the road. National
automobile policy should address the problems of vehicle parking spaces and rights of
pedestrians across the country.
India’s passenger car and commercial vehicle manufacturing industry is the
seventh largest in the world. India has become a manufacturing hub for Auto mobile
industry . Industry needs to train more Automobile engineering graduates , PG’s and
Doctorates to promote R&D activities , future growth and production of innovative
world class, fuel efficient products for the vision 2025.Appropriate strategy,
manpower planning , skill development and employability of Indian engineers and
technicians must be improved to match the future requirements of manpower.
BACKGROUND
In the 21st Century, we will be dealing with new concepts like “self branding”
an insight into the new manufacturing environment and social networking and lean
manufacturing for survival in 2025 Rapid economic expansion is fuelling the
demand for skilled manpower in the face of low levels of workers employability.
NSDC, and state & central Government initiatives hold crucial importance in the
development of skilled manpower. Capacity building initiatives in the Manufacturing
Industry for the vision 2025 must be started today. Every project throws some
challenges, but a challenge always leads to opportunities ,which should be used
pragmatically.
239
Managing Director and Chief Executive Officer of National Skill
Development Corporation (NSDC) Shri Dilip Chenoy stated on 09 Nov 2012, that
the corporation is scaling up its network to include a large number of manufacturing
companies for imparting training in skill development and achievement of the target
of 150 million workers by 2022. State governments and other central Govt.
Ministries are responsible for skill training of 350 million workers by 2022. If
necessary NSDC will intervene to provide proper carrier avenues for the workers . It
is essential that industry employs only those candidates , who are certified by the
Sector Skills Councils(SSC). NSDC hopes to trained 2.57 lakh workers during 2012
.Rajasthan State Skill and Livelihood Development Corporation (RSLDC) has set a
target of training 1 million youths over the next three years. If all the currents
projects stay in place, 7.40 Cores skilled youths will be trained at a project cost of Rs
1.68 cores. NSDC is providing funds for skill development initiatives at 6 % interest
only with ten year repayment cycle. RSLDC has trannied more than 85000 youths
with 300 training partners in 34 sector and 192 courses .CII is also taking action to
align skilling initiatives with the industry to improve employability of the candidates.
In rajasthan , CII has adopted ITI’s through PPP with the collaboration of SSC’s and
Skills Gurukuls. China has successfully managed to increase its labor productivity
during the past few years with proper focus on skill development .
September 2012 experienced the steepest fall in vehicle sales growth at 9.43%
during the last four years. The festive session has failed to boost customer sentiment
of car and two-wheeler buyers. Domestic car sales in September, 2012 declined by
5.36%, while the motorcycle sales declined by 18.85%. Total sales of vehicles across
all categories registered a dip of 9.45% to 14.18 lakh units in September, 2012 against
15-65 lakh units in September, 2011. In December, 2008 vehicle sales had declined
by 18.25% , whereas the sharpest decrease in two wheelers sales figures was 23% in
December, 2008.
India is a mature auto market . Lot of factors affect sales volumes and market
development . During economic down slide, there is huge pressure on the company
profit margins. Commercial vehicle (CV) sales are projected to double in 5 years and
rise from 0.8to 1.6 million units in 2017. TATA Motors Ltd (TML) and Ashok
Leyland are major producers of commercial vehicles. The German Auto giant
240
Mercedes Benz is set to introduce three heavy duty global standard trucks with the
caption Bharat Benz under its 100% owned subsidiary Daimler India commercial
vehicles pvt. Ltd (DICV) . Indian commercial vehicles segment will become highly
competitive in the coming decades 2012-22. Competition among the truck
manufactures will ultimately benefit the customers and fleet owners. Bharat Benz
plans to launch 17 product in the range of 7 to 49 Ton trucks. DICV, Chennai plant
has been setup with an investment of 40,000 Crores , employing 2000 personnel with
a capacity to produce 36000 units per annum with 85-90% local content. The
company will also provide financing facilities to the customers through banks. Bharat
Benz trucks are expected to change the market dynamics by the end of 2013.
Indigenous CV manufacturers are also getting ready to meet the competition .Bharat
Benz is planning to provide strong after sales services through 28 dealers at 103
locations in India.
Recent years have witnessed major automobile manufacturers incurring huge
expenditure to recall vehicles for repairs and /or replacements of defective
components /parts. Recall of 7.4 million vehicles worldwide on 10th October, 2012 by
the Japanese biggest automaker Toyota Motor Corporation has dented the reputation
of the corporation, besides causing its economic loss. However, the process of
repairing the driver side power window switches would involve only putting heat-
resistant grease on the switches or exchanging them to mitigate the cause of fire.
Either due to intense international competition or the desire to quickly realize the
R&D expenditure incurred by the company over a number of years to develop a new
vehicle or a refresh version of an old vehicle , manufacturers are launching their new
products without due care and after full life cycle – span trials / testing of the
assemblies /components /parts fitted on the vehicle. It has been reported in September,
2012 that the Italian sports car maker Lamborghini is recalling 1500 Gallardo Coupe
and Spider auto models from years 2004 to 2006, because the power steering fluid
could leak and catch fire. Lamborghini documents sent to US safety regulators state
that pipes can corrode near the power steering pump. In rare cases, fluid can leak onto
the hot engine and cause a fire. As a result , the brand image of important
manufacturers like Toyota (Japan),Lamborghini (Italy), and NANO (India) etc. is
getting dented and customers confidence is being shaken .Indian Customers psyche is
241
extremely sensitive and the customers do not venture again to try or buy any other
improved model from the same company.
ECONOMIC SLOWDOWN
Global economy is passing through critical times today. This time the
economic slow down is widespread and has affected the advanced economies &
developing countries including China, India and other countries across the globe. All
countries are likely to post lower growth rates during 2012,than that what was forecast
earlier. Austerity measures being adopted by the developed economies are leading to
social unrest and unemployment. Consumer sentiment continues to be down and the
Auto industry growth in 2013 is likely to remain slow. Rising inflation rates, interest
rates and fuel prices are adversely impacting the auto industry. Even the biggest
automakers across the globe are experiencing series of setbacks in the current times.
Auto industry economy is experiencing a slowdown shock, since January, 2012.
Passenger car industry as a whole has witnessed a drop of 15% in recent months, but
India has a mature and developing auto industry market. Every stake holder in the
auto industry is banking on improvement in the buyer segment by the end of 2012.
Despite the slowdown in auto industry there is a continuous increase in
demand of automobiles from global customers. Meeting the customer demand is of
high importance and reduction of lead time plays a vital role for continuing and
improving the business. The long lead times and high work in process inventory are
eating into the vitals of the industry and are reducing the profit margins. We are living
in an increasingly globalised world, where growth is slowing down in large markets
including US, UK and Europe. Uncertainty has increased in this challenging
environment, which has affected the customer’s confidence. Companies should
change their focus from growth to increasing efficiency, maintaining stability,
employment and risk prevention. Index of Industrial Production (IIP) has reduced
between 0.7 – 2.4% during the period ending September 2012. Therefore,
manufacturing companies should start focusing on increasing efficiency instead of
growth in the slow growth market.
242
LATEST DEVELOPMENTS
Increasing global competition and complexity in the automotive sector has led
companies to find ways to maximize value of their products, processes, projects, or
services within a total system. Value Engineering has evolved into a strategic and an
innovative tool that has the potential to search alternative materials, technologies and
processes through evaluation of creative ideas. The maximized value is approached
from a customer viewpoint and the related function is expected to operate at the least
cost without affecting its quality and reliability. The literature on Value Engineering
covers all the issues involved, but it is essential to consider all the related aspects too,
that focus on maximizing values from the customers’ point of view in a
comprehensive manner.
Both indigenous and foreign auto manufacturers are producing automobiles to
meet the domestic and export markets across the globe.
Raises in inflation rate and prices of petrol/diesel are continuously creating a negative
sentiment among the customers . However, economic recovery in Europe and U.S is
likely to help India and other countries. Foreign brand auto manufacturers have
established their subsidiaries and manufacturing plants in India to cater both domestic
and export markets .Export strategies of foreign companies provide an important
hedge for the company.
A lot of future vehicle launches will be in the small car segment and diesel
versions of popular models. 70% of all cars sold in India are being financed by the
banks. Maximum number of cars sold today are in the small car segment and this mix
is not likely to change in the coming decades. Indian Govt. policies should remain
stable and transparent, so that Auto manufacturers are able to plan their long term
production levels. Keeping in view the above uncertain conditions, major German
Auto gaiant VOLKS WAGON Co has postponed its expansion plans till 2015.The
president and MD of Ford Motor Co.(India Branch) ,believes that transparent and
stable Govt. polices and positive consumer sentiment will go a long way in boosting
the auto industry market .If the Govt. suddenly decides to increase taxes on diesel
fuel ,it would create major problems for auto manufacturers through confusing
signals.
243
TATA MOTORS LTD.
Tata Motors Ltd. Karl Slym new MD and Shri Ranjit Yadav President
Passenger Vehicle Business (PVB) have taken over their duties in October, 2012 and
they are planning to put the passenger vehicle business on fast track. They have made
plans to introduce dynamic product planning in TML to boost the Nano sales. In
recent months, TML had lost its market share to Mahindra & Mahindra Motors. ACE
model of TML, which was introduced in India, a few years ago is having good sales
volume in the market. Jaguar Land Rover sales are also on the rise. But, both Nano
and Indica are facing challenges, today. Nano was introduced three years ago, but it
has not achieved volume sales, as yet. Brand image of Nano car had been impacted
adversely, since its launch in 2009, due to various incidents of fire and other unsafe
incidents. Customers do not want to be associated now with a cheap or unsafe car and
have moved on to buy the premium hatchbacks. There was no reason to fail for the
Nano, as a low-cost People’s car. Nano is being branded today as the Rs. One lakh
car. Sanand plant was designed to manufacture around 30,000 Nano vehicles per
month in three shifts , but at present Nano sales are not averaging even 10,000 units
per month. Valuable time was lost in re-locating the manufacturing facility from
Singur (W.B) to Sanand (Gujrat), which had affected the marketing plan, in which
real customers for the Nano were expected to come from smaller cities and towns.
Auto industry experts believe that, if TML had not faced problems at the West Bengal
Singur facility it might have just clicked, since a loyal base of customers was waiting
to buy the Nano. There is no doubt that TML has a huge advantage in its cost-
competitive manufacturing base, which can be leveraged to quickly roll out new
models of cars . This is the main reason, why FIAT Co. is not changing its alliance
with TML. Mr. Karl slym new MD, should focus on introducing new products
sandwiched between the price tags of Nano and Indica by employing Fiat’s 1.3 lt.
multijet diesel engine which is ideally suited to achieve high volume sales.
A contemporary shaped Nano fitted with a diesel engine keeping in tune with
the market trends is likely to achieve volume sales in India. By using their experience
in brand image building and marketing, Mr. Karl Slym and Mr. Ranjit Yadav can
reposition the Nano as a smart car and project its lower price as an important factor in
244
its favor. Sales are gradually increasing and satisfied customers experiences over the
years will further enhance the Nano sales.
On a standalone basis, TML is impacted by weak macro-economic outlook
and sluggish industrial demand coupled with diesel price increases. These factors are
affecting medium CV’s and heavy CV’s. The CV market share is 69.7% and
passenger car sales share is 12.3% today. Karl Slym MD of TML opines, that new
cars & features generate sales in India. Therefore, TML plans to maintain a mix of
refresh & new vehicles in CV’s and passenger cars to introduce six cars and 25 CV’s
and products in volume growth segments like utility vehicles. TML has been losing
market share in passenger cars in the last few years and sales volumes are lower than
expected. The commercial vehicles share has reached 59.7% and passenger cars
market share is at 12.3% today. Medium commercial vehicles and heavy commercial
vehicles sales have been reduced.
MAHINDRA AND MAHINDRA
In recent months, Mahindra and Mahindra group has been growing its auto
manufacturing segment and has entered all segments of the automobile industry with
its overseas forays and acquisitions. Farm equipment sector sales were low in Q2 and
is struggling to survive today. Operating margins were lower at 11.4% (12%). The
company performance was boosted with higher sales in vehicles and SUVs by 32%.
M & M has launched its first premium SUV in October 2012. M&M has recently
acquired the South Korean Co.Ssang Motor Co, which is expected to break even in
two years. REXTON manufacture at the plant , RX5,a high end – SUV was launched
on 20 Nov.2012.
FORD MOTOR COMPANY
Ford company had commenced its operations as a marginal player in India, in
1995. It became a serious player with the launch of FIGO model in March, 2010. Ford
company has witnessed slow growth, stiff competition and rapid shift of the market to
diesel vehicles. The company believes models based on global proven platforms and
hatch backs can achieve higher sales volumes and that its strategy is on the right track,
245
despite a slowing economy, where rising inflation rates are continuously creating
worry in the minds of customers.
Ford company is planning to make a mark in the small car segment with high
levels of localization in addition to maintain its domestic and export strategy for
vehicles. Small car is expected to meet the demand of customers who are graduating
from two wheeled vehicle users to four wheeled vehicle owners due to their enhanced
purchasing power
It has established its manufacturing plants in Chennai and Gujrat with a
capacity to manufacture 4.4 lakh vehicles and 7.1 lakh engines p.a. for export and
sales in India. In order to beat its competitors, around 70% local content will be
introduced in the low-cost ECO-Sport SUV car to make it competitive & obtain
economy of scale through exports and sales in India. Ford company has failed to
attract customers for the sale of its global Fiesta Sedan launched in July 2011.
Currently, Ford has adopted a multi-pronged strategy for the years 2012-2014 to
introduce new compact models and achieve high volumes in India.
VOLKSWAGON INDIA (VW)
German automobile major passenger car group is planning to introduce a
specially design small car to fill the gap in its portfolio. Managing director of VW
feels that a low-cost entry level car would be very difficult to support with our brand
expectation of safe, sturdy and good to drive vehicles. Small cars would continue to
remain a dominant part of the Indian market. SUV’s and MUV’s segment is
experiencing much higher rates of growth, which are expected to become dominant
products in the market. Volks Wagon ,Touareg SUV is targeting hardcore enthusiasts
at high prices and its sales volume is low.
Volkswagon India has introduced Vento and Polo variant cars in India and has
a market share of just less than 3%. The company sold 6091 vehicles in August, 2011,
but the sales have dropped to 4410 vehicles in August, 2012. Passenger car industry
as a whole has witnessed a drop of 15% in recent months. Volkswagon company
opines that India is a mature and developing car market. The company has planned its
growth as a customer driven organization. A large number of factors affect the sales.
246
It is necesary to keep a continuous watch over the car market. If the car market
continues a declining trend, the industry will experience severe margin pressures. VW
is working hard to gain more than 3% market share and increase its number of
dealers to 150 in 2012.
MERCEDEZ BENZ
The Mercedes Benz had started its luxury car sales, in completely knock down
(CKD) condition in India. Luxury car sales had been zooming at 50% CAGR from
2007 till 2011. Slow down has started since Jan 2012 and in the first 8 months of
2012, luxury car sales have been flat with a modest 8% growth. The company has
sold 250 B-class imported vehicles in 2012, but the market remains unpredictable.
Audi and BMW mini SUV’s sales have increased affecting adversely the company car
sales. It has now introduced B class segment cars in CKD to beat the competitors.
Mercedes-Benz rolled out its first locally manufactured M-class luxury SUV costing
Rs. 45.64 lakhs from its Chaka plant near Pune in October, 2012. In the premium
hatchback segment there are both diesel and petrol variants. The SUV segment is
dominated by diesel vehicles and no petrol SUV is selling fast. Currently diesel
vehicles are available in hatch back and the low and segment sedan cars.
GENERAL MOTORS
US car major General Motors(GM) company has acquaired 43% share from
its equal joint partner Shanghai Automotive Industry Carporation (SAIC) group in
October, 2012. This decision reflects its confidence in the long term potential of
Indian auto industry. GM plans to indtrouce hatchback SAIL and its Sedan Version,
MPV Enjoy by end of 2012.
MARUTI SUZUKI
After the entry of M/s Suzuki Corporation in India, automobile manufacturing
industry has witnessed rapid growth since early 1980’s and by the late-1990's the
industry reached self reliance in engine and component manufacturing from the status
of a large scale importer of components and vehicles. Over a period of more than two
decades the Indian Automobile industry has experienced rapid growth driven by the
entry of foreign players and indigenous manufacturers with foreign collaboration.
247
With comparatively higher rate of economic growth in comparison with the global
powers, India has become a hub of domestic and exports business. In the recent years,
the automobile sector has been contributing around 12% share to the GDP growth in
India.
M/s Maruti Suzuki has introduced new Alto-800 in petrol and CNG versions
in October, 2012. Alto car was first introduced in September, 2000 and more than 2
million units have been sold till date. It is the largest selling car in past 8 years. New
version Alto has 15% higher fuel efficiency giving 22.4 kpl. It is fitted with a higher
compression ration and volumetric efficiency engine. At the selling price of Rs. 2.44
lakh, this low priced car is loaded with high value features.
FORCE MOTORS
Force Motors, Pithampur (M.P.) has introduced “Traveller 26” LCV in
October, 2012. The bus is powered by a 129Ps/295 Nm common rail engine made
under licence from Daimler AG. It uses dual mass fly wheel technology and has
ventilated disc brakes on all wheels. Force Motors is planning to introduce three more
variants in MPV and SUVs in 2013.
HONDA
Honda company has decided to make its diesel debut with the Rs. 7 lakh
“Amaze” sedan in 2013 and a variant of its popular and best seller “City” model. In
the next few years the company will launch diesel variants of its small cars with
smaller engines to cut costs. A new MUV will be introduced in 2014, while a compact
SUV is expected to be launched in 2015. The company’s diesel variants will be fitted
with a new all-aluminum 1500cc engine which will be manufactured in India and
strapped across various models including a 7-seater MUV and an all-new compact
SUV.
Being a late entrant into the fast growing diesel market, Honda has lined up an
aggressive plan to spread its wings fast into the segment. Lack of diesel variants has
already resulted in los of crustal market share. Amaze model will compete with
segment heavy weights like Maruti Suzuki’s Desire and Tata Motor’s Indigo CS. The
248
company has decided to make the diesel engines and transmission in India to control
the costs.
NISSAN COMPANY
Japanese Auto Major Nissan Company has established a manufacturing plant
at orgadam near Chennai . It had sold 33,000 vehicles in 2011 and has planned to sell
66,000 vehicles in 2012 , besides maintaining its export volumes at 100,000 vehicles
per annum. The company has already launched six models (including 3 models
manufactured in India). The company has launched a 7 seater vehicle Evalia in 2012
and it has planned to launch 10 new models including Datsun in 2016.
TVS MOTORS
TVS motors has recorded drop in sales during the second quarter July-
September, 2012. Between April-Septermber, 2012, industry growth had declined to
2%, when compared to 19% in the same period of 2011.
BAJAJ AUTO
The two wheeler major Bajaj Auto sales from April-September 2012 has
experienced a down slide of 4%. Its exports have also declined by 4% during the same
period. Bajaj Auto has 27% share in the two wheeler domestic market and 33%
market share including exports. The company has adopted a strategy to focus on high
end motorcycle segment with its variable cost structure. Customers are value
conscious. Mileage is important, but customers want to have more features. Better
technology offers an opportunity to add features in different segments of vehicles.
FUTURISTIC VEHICLES
Tata Motors is in the forefront of new technology applications. TML has
developed the worlds first air powered car (Zero emission). Tata motors Ltd has
scheduled the Air Car to be launched by the end of 2012.The air car developed by ex-
Formula One engineer Guy N, for Luxembourg-based MDI, uses compressed air to
develop the necessary engine power for running the car. This car is called ‘MiniCAT’
and is expected to cost Rs. 365,757 or $8,177. The ‘MiniCAT’ is simple, light ,urban
car which has a tubular chassis and its body is made of fiberglass, which is glued and
249
not welded. A Microprocessor is used to control all electrical functions of the car. One
tiny radio transmitter sends instructions to the lights, turn signals and every other
electrical device on the car. The temperature of the clean air exhaust is between 0 C to
15C below zero, which makes it suitable for use by the internal air conditioning
system without using gases or any other power sources. There are no keys, just an
access card which can be read by the car from the owners pocket .It costs less than Rs
50 per 100Km, that’s about a tenth of the cost of a car running on gas. Its mileage is
about double that of the most advanced electric car, which is useful for city motorists.
The car has a top speed of 105Km per hour and would have a range of around 300Km
between refuels. Refilling of the car can be done at adapted gas stations with special
air compressor .A fill up will only take two to three minutes and costs approximately
Rs 100 .This car can also be filled at home with its onboard compressor. It will take 3-
4 hours to refill the tank, during sleep hours , because there is no combustion engine.
Oil changing requires 1 liter of vegetable oil every 50,000 Km and due to its
simplicity very little maintenance is required
Tata technologies have unveiled a cheap Electric Car eMO (Tata’s Business
Card) at the Detroit show in January 2012 which is priced at $ 20,000. Mr. Kewin
Fisher heads the groups vehicle development team. It weighs 900 kg and according to
Warren Harris, President, Tata Technologies, this vehicle employs intimate
understanding of frugal engineering principles. The vehicle has a steel frame which
meets the existing crash standards and has a seating capacity for four adults.
Tata Motors Ltd. CNG variant of the Nano is going to hit the roads much
before the diesel variant. The diesel variant is expected a year ahead from now. The
CNG model was displayed at the Indian Auto Show 2012, which has a dual fuel
option of CNG and petrol. At a time, when fuel conservation is becoming imperative
across the world, Tata Motors is aiming to make a car, Tata Megapixel that can
deliver up to 100 kilometers from a litre of fuel by using a unique combination of
technology. The Tata group has announced in July 2012 the development of a four-
seater concept vehicle which is a global range extended electric vehicle (REEV)
meant for city driving. This new innovation from the Tata group is expected to be
commercially launched in around three years from now.
250
DIESELISATION
Manufacturers are producing more diesel vehicles today, due to the growing
customer demand, price differential in petrol & diesel prices and the fact that a diesel
vehicle is 20 to 40% more fuel efficient. Currently refineries are getting Rs. 12.50
lesser recovery per liter of diesel. Government has regulated the prices of petrol, but
diesel price is still being regulated. Internationally diesel car are using clean diesel or
low-sulphur fuel, which is emitting lesser pollutants. European consumers are using
super refined diesel. Diesel car in Europe must conform to Euro-V emission
standards. In France 77% of automobiles are operating in diesel fuel, while Spain has
69% , western Europe has 53%, India has 49%, Germany has 44% and Japan has only
2% diesel vehicles.
Car manufacturers in India are capable of introducing more efficient engines,
but Government has to decide a road map and implement the policy of enforcing
tougher emission standards like BSIV-IV/V. Lax enforcement of vehicle fitment
certificate is a major contributor to vehicular pollution. India needs to modernize
commercial vehicles on priority and weed out more than 20 years old vehicles,
Which are using outdated technology.
A recent Central Pollution Control Board study conducted in Delhi has
concluded that vehicles are contributing only 6.6% to particulate matter (PM)
emissions. Road dust created by the construction activity is the biggest contributor of
PM at 52.5% . Industries around Delhi and neighboring states account for as much as
22% of PM, while 19% is due to its geographical location . According to the
information provided in the parliament on 23rd August 2012 sector wise diesel
consumption data shows that generation sets are consuming 5%, Mobile towers 2% ,
Commercial vehicles 16% and other 77% of total diesel consumption . All related
factors must be tackled together to provide safe quality air to Delhi citizens or
elsewhere in India. Since the year 2000, the levels of two key pollutants , namely PM
10and nitrogen oxides have risen sharply by 47% and 57% respectively beyond the
human consumption safety limits, which are posing a serious threat to Delhi
population .
251
There is a spurt in the introduction of diesel cars, UV’s and CV’s today. GM,
Honda and other companies have decided to introduce diesel variants of their best
seller vehicle models to meet the market competition. Honda company sales fell by
4% in 2010-2011 and by 8% in 2011-12. Being a late entrant in to the fast growing
diesel market, companies have lined up an aggressive plan to launch vehicles in the
diesel segment. Honda is introducing two new cars in 2013 with entry level Sedan
‘AMAZE” and a diesel variant of its best seller city model.A new all aluminum 150cc
engine is being manufactured in India to be strapped across various models including
a 7- seater MUVin 2014 and new compact SUV in 2015. To keep the prices low
,Honda has decided to keep the length of the car under 4 meters. Honda is decided to
make the diesel engine and transmission at TAPUCARA plant in India to control
cost. New models will also be rolled out later from this plant .Honda is also planning
to manufacture a smaller diesel engine in India for small cars.
EXPORTS
The domestic players as well as the foreign companies are exporting their
products today. Indian automobile manufacturers including Tata Motors, Maruti and
Mahindra and Mahindra are the major exporting companies to Europe, Middle East,
Africa and Asian markets. After having firmly established themselves in the domestic
market the automobile sector is now penetrating the international arena and vehicle
exports are at their highest levels. Top Ten Players in Indian Automobile Sector
include Maruti Suzuki India, Hero Motors Limited, Tata Group, Bajaj Auto Limited,
Mahindra Group, Ashok Leyland, Yamaha Motor India, Hyundai Motors India
Limited, Toyota Kirloskar Motor Private Limited and Honda Siel Cars India Limited.
CONCLUSION
The potential market for low-cost cars is enormous throughout the developing
world. In the current slow growth environment, inventory is piling up in all auto
manufacturing companies. Auto manufacturers, therefore need to address the
problems of customer demands and market preferences more effectively employing
value engineering methodologies to introduce new fuel efficient vehicles, value added
and improved aesthetics models to garner higher market share in the world market.
252
Automobile industry including auto-components manufacturing industry is
expected to witness higher rates of growth in the coming decades. From a low-key
supplier of auto components in the domestic market, the industry has emerged as a
significant player in the global automotive supply chain. Preparations for building
manufacturing capacities and capabilities for futuristic vehicles and components
industry must be started in real earnest today.
REFERENCES
www.google.com
www.tatamotors.com
Cerasale, M. & Stone, M. 2004. Transforming how companies serve customer. IEE
Engineering Management: 42-43.
Cheah, C. Y. J. & Ting, S. K. 2005. Appraisal of value engineering in construction in
Southeast Asia. International Journal of Project Management, 23: 151-158.
Christian, A. & Bjornenak, T. 2005. Bundling and diffusion of management
accounting innovations: The case of the balanced scorecard in Sweeden. Management
Accounting Research, 16(1): 1-20.
Cooper, R. B. & Zmud, R. W. 1990. Information technology implementation
research: a technological diffusion approach. Management Science, 36: 123-139.
Creswell, J. W. 2003. Research design. Qualitative, quantitative and mixed methods
approaches. (2 ed.). Thousang Oaks: Sage Publications.
Davies, K. E. L. 2004. Finding value in value engineering. Cost Engineering, 46(12):
24-27.
Dawson, B. 2000. Evolving value management- Where to next? Paper presented at
the HKIVM International Conference, Hong Kong.
Dell'Isola, A. J. 1988. Value engineering in the construction industry. Washington D.
C.: Smith Hinchman & Grylls.
253
ISSN-0974-2093 MERI - JOURNAL OF MANAGEMENT AND
INFORMATION TECHNOLOGY
GROWTH OF INDIAN AUTOMOBILE INDUSTRY
B. L. Dhabhai, Research Scholar, Suresh Gyan Vihar University, Jaipur – Email : [email protected]
– Membership No :- F 1066850 MC
&
– Dr. J.L. Sehgal, Chairman, IE(I), RSC, Jaipur
– Membership No :- F 100519-3 AS
ABSTRACT
The demand of automobiles is increasing continuously across the globe. The
auto industry basic parameters are strong and despite the recent increase in diesel
prices, dieselization of vehicles will certainly continue in the short term. We are
witnessing, today new launches of improved versions of vehicles with attractive
features .Manufacturers are offering the customers, heavy discounts attractive
financing options and bank loans at lower interest rates to boost their sales. Success of
a company depends on making the customers happy and everything else is incidental.
Global economy is passing through critical times today. This time the economic slow
down is widespread and has affected the advanced economies & developing countries
including China, India and other countries across the globe. All countries are likely to
post lower growth rates during 2012,than that what was forecast earlier.
The present industry hiccups are temporary due to economic slowdown across
the globe and the industry manger must keep focusing on medium and long term
goals. Automobile penetration in the population is less than 3% in India and the
demand is likely to double in the next 5 years Increasing global competition and
complexity in the automotive sector has led companies to find ways to maximize
value of their products, processes, projects, or services within a total system. Value
Engineering has evolved into a strategic and an innovative tool, that has the potential
254
to search alternative materials, technologies and processes through evaluation of
creative ideas. The maximized value is approached from a customer viewpoint and
the related function is expected to operate at the least cost without affecting its quality
and reliability. The literature on Value Engineering covers all the issues involved, but
it is essential to consider all the related aspects too, that focus on maximizing values
from the customers’ point of view in a comprehensive manner.
INTRODUCTION
Indian Automobile industry is bearing the brunt of economic slowdown,
today. India has a very low penetration of car ownership ,but the scenario will change
in 5-10 years and the automobile market is expected to become worlds third largest
market by 2020. The car production is expected to increase from 2.5 million cars
today. It would double to around 5 million in the next decade. The society of Indian
Automobile Manufacturers (SIAM) has scaled down the growth prospects for the
industry for 2012. The important factors, that drove the automobile industry a decade
ago have changed. The Interest rates were around 7.5% as compared to around 12%
today. Petrol prices are much higher now as compared to the world markets .In India,
customers purchase cars only, when their sentiment is positive. During the last
quarter, the economy grew at 4.9% only. In this scenario consumers have become
more conservative. Lower end SUV in the Multi - Utility vehicle segment is selling
due to reasons of people movement .The remaining industry growth is almost flat,but
the market is still on the positive side. Automobile Companies, normally plan their
investments on a long term basis, but they plan their production schedule for a three to
four year period only. Although, lower sales are upsetting the industry, yet the
growth prospects are expected to improve in the long run .Companies are creating
higher value products for the customers with attractive features and financing
facilities, today. They are exploring different segments and products in smaller cars
and SUV’s however most of these products sales are growing on the back of diesel
offerings.
Global economy is passing through critical times today. This time the
economic slow down is widespread and has affected the advanced economies &
developing countries alike, including China, India and other countries across the
255
globe. September 2012 experienced the steepest fall in vehicle sales growth at 9.43%
during the last four years . The festive season has failed to boost customer sentiment
of car and two wheeler buyers. Domestic car sales in September 2012 declined by
5.36%, while the motorcycle sales declined by 18.85%. Total sales of vehicles across
all categories registered a dip of 9.43% to 14.18lakh units sold in Sep 2012 as against
15.65 lakh units sold in Sep 2011. In December 2008 vehicle sales had declined by
18.25% .The sharpest decrease in two wheeler sales figures was 23% in December
2008. All countries are likely to post lower growth rates during 2012,than that what
was forecast earlier. Austerity measures being adopted by the developed economies
are leading to social unrest and unemployment. Consumer sentiment continues to be
down and the Auto industry growth in 2013 is likely to remain slow. Rising inflation
rates, interest rates and fuel prices are adversely impacting the auto industry. Even the
biggest automakers across the globe are experiencing series of setbacks in the current
times. Auto industry economy is experiencing a slowdown shock, since January,
2012. Passenger car industry as a whole has witnessed a drop of 15% in recent
months, but India has a mature and developing auto industry market. Every stake
holder in the auto industry is banking on improvement in the buyer segment by the
end of 2013. Auto manufacturing companies need to adopt value engineering
methodologies and take policy initiatives in real earnest to secure a competitive edge
in the market, reduce manufacturing costs & improve the quality of products. Value
Engineering methodologies can serve as an important tool to improve quality and
reliability of products at reduced costs and achieve the target costing objectives of the
firm. Value Stream Mapping (VSM) is a powerful visual, simple and easy to
implement tool for lean manufacturing which allows the firms to understand and
improve continuously various types of wastes (mudas) in the manufacturing process
to improve bottom lines and satisfy customers in modern competitive market
environment.
BACKGROUND
The demand of automobiles is increasing continuously across the globe. The
auto industry basic parameters are strong and despite the recent increase in diesel
prices, dieselization of vehicles will certainly continue in the short term. We are
witnessing today, new launches of improved versions of vehicles with attractive
256
features .Manufacturers are offering the customers, heavy discounts attractive
financing options and bank loans at lower interest rates to boost their sales. Success of
a company depends on making the customers happy and everything else is incidental.
Management must make concerted efforts to understand the needs of customers to
provide service and after sale service to succeed in the market.
Meeting the customer demand is of high importance and reduction of lead
time plays a vital role for continuing and improving the business. The long lead times
and high work in process inventory are eating into the vitals and are reducing the
profit margins. Increasing global competition and complexity in the automotive sector
has led companies to find ways to maximize value of their products, processes,
projects, or services within a total system. Value Engineering has evolved into a
strategic and an innovative tool that has the potential to search alternative materials,
technologies and processes through evaluation of creative ideas. The maximized value
is approached from a customer viewpoint and the related function is expected to
operate at the least cost without affecting its quality and reliability. The literature on
Value Engineering covers all the issues involved, but it is essential to consider all the
related aspects too, that focus on maximizing values from the customers’ point of
view in a comprehensive manner.
Urban population is expected to increase from the present 28% to around 45%
by 2025. Rural population is also becoming progressive and there is a huge market for
automobiles in India. Automotive industry in India is one of the largest and one of the
fastest growing industries in the world. India manufactures over 11 million vehicles
(including 2 wheeled and 4 wheeled) and exports about 1.5 million annually. India’s
passenger car and commercial vehicle manufacturing industry is the seventh largest in
the world. There are 22 commercial vehicle manufacturers which are engaged in the
production of automobiles in India. Indian automobile market has become highly
competitive today.
The overall production volume in the automotive segment is estimated to grow
at a capital CAGR of 10.3 % over the next five years FY -2011-15 as shown in the
graph.
257
Fig..2 : Auto Component Industry Sales (Source: ACMA
The Key growth drivers of auto industry are the growing population with
increased income and spending levels and attractive financing options. Government
policies and initiatives are also acting as positive factors. Owing to the availability of
skilled human resources and talent pool, low-cost sourcing capabilities and increased
domestic demand, India has become a manufacturing hub for the establishment of
both technology and manufacturing platforms of auto manufacturing and auto
components industry. The restraints for the auto industry growth, include increasing
fuel prices, freight charges, infrastructure bottlenecks, fluctuating rates of interest,
emission norms/levels, aging norms and loading limits for the commercial vehicle
segment. Industry needs to offer the consumers, innovative value-added products in
future to boost its growth prospects. Continuous growth of automotive industry has
also provided a strong impetus to the forging industry, since the newer generation of
cars require better quality forgings. M/s Amtek, Bharat Forge and Sundaram
Fasteners are providing necessary support to the auto industry
NATIONAL MANUFACTURING POLICY 2012
The manufacturing sector has emerged as a science based knowledge intensive
high technology area with serious implications for technical change, competitiveness,
growth in employment, trade patterns, location of manufacturing activities and global
258
division of labor. Moreover, new climate-responsive technology development is an
essential part of attempts to resolve the pressing environmental problems haunting the
human civilization to realize the goals of transformational growth. The crucial factor
for realizing the rising expectations and aspirations for future auto industry growth in
India, is the effective use of modern science, state of art manufacturing machinery &
technology, automation , robots and infrastructure development.
The national manufacturing policy is likely to be unveiled by early 2013. The
draft policy promises to create 100 million new jobs and increase the share of
manufacturing from its present level of 15-16% to 25% in the country’s GDP by
2025. Some states, like Rajasthan, Maharasthra and Gujrat have already started
acquiring land for creating national manufacturing and investment zones (NMIZ) in
their states to boost the growth of manufacturing industry segment. Central
Government is seriously concerned about an impending slowdown in the
manufacturing sector and industrial production. Industry sources are worried about
high cost of credit, investment slow down, skill shortage, high input cost, hurdles in
getting environmental and other clearances and logistics support. A manufacturer
would like to have easy access to infrastructure at reasonable cost, ready to deploy
labor force and the flexibility to align the cost of personnel to the scale of operations
and provisions for managing the eco system. Special Incentives for Green
Technologies and manufacturing units in NMIZs include the following:
a) Low-interest loans for manufacturing to invest in new plans to produce
clean/green technology for investments in new plants to produce green products.
b) Creation of a central fund for supporting research in the areas of green
manufacturing
c) Provide grants for workers training that will lead to expanded energy efficiency
and renewable energy industry workforce.
d) Preference to green units/green products during procurement by State/Central
Government.
259
e) If an SPV in a particular NMIZ decides to have an IPP based on renewable green
technology, an investment subsidy to cover the additional interest cost per mega
watt may be considered.
The national automobile policy 2011 is expected to be released before end of
2012. Passenger and commercial vehicle segments have become highly competitive
with the entry of international brands like Ford, GM, Fiat, Audi, Meredez Benz,
Volvo and Navistar in India. TML is likely to introduce a new line of highly
competitive, fuel-efficient vehicles to face the competitors challenge and garner a
higher market share. TML market share during 2011-12 was reduced to 58.5%. In
order to regain its earlier higher market share and develop a competitive edge in the
market, TML is starting the manufacture of cars with indigenously developed higher
powered and more fuel-efficient engines.
POLICY INITIATIVES
The Government policy initiatives are necessary to create a vibrant and
globally competitive automotive industry. The enhancement of value addition and
local capabilities in the automotive industry are necessary to achieve significant
results. Government initiatives also act as catalytic agents for the growth and
development of automotive components and parts manufacturing industry. The
automotive industry is perceived by researchers as an important sector representing
the biggest industrial sector in the world economy (Helper, 1991). Furthermore,
Berdoto (1991) and Wells & Rawlinson (1994) in Story et al. (2001) highlighted that
significant changes have taken place in the automotive industry structure.
Automotive manufacturers are always under pressure to switch over to new
technologies and processes, cut costs, shorten lead times for introduction of new
product makes and models and resort to outsourcing of components by devolving to
suppliers much of the burden of designing and manufacturing various components
and assemblies.
Global competition and complexity in the automotive sector has also led
companies to employ latest materials, technologies and processes for value addition
in their products. VE employs functional analysis to identify and eliminate
260
unnecessary cost by introducing cost effective design of products or redesign of
products, processes, projects or services.
All organizations need to reduce unnecessary cost by identifying and
eliminating waste at the earliest opportunity. Fong (1999) described VE as a creative
group problem solving technique. VE becomes a useful tool in resolving issues in
the organization by identifying the main function of design, product, project or
service. VE has evolved into an innovative tool that develops alternatives through
evaluation of creative ideas and serves as an important tool in the pursuit of obtaining
a competitive edge in the market.
ALTERNATIVE MATERIALS
In the contemporary world, the spirit to innovate on technologies has become
the central force that transforms emerging economies as their expanding market
potentials provide enormously challenging environment which breeds innovations.
From Automotive to aviation, no sector can perform without steel industry.
Steel forms 60-65 % of the total weight of the vehicle. Flat products, such as hot
rolled, cold rolled and coated steel sheets account for about 80% of steel products
consumed by the auto makers. However, the OEM’s are still importing their specific
requirements of High strength steels, Advanced high strength steels , Dual - phase
and Trip steels to meet their needs Currently, steel is being substituted by the use of
aluminum, magnesium, titanium, carbon fiber , non – metallic’s like SRP
composites, plastics, resins ,etc. Even as the automotive industry is growing at a rapid
rate , the demand for steel is gradually decreasing due to the use of newer lighter
materials to effect, value- addition , weight reduction and cost – reduction as well as
to effect improvements in fuel efficiency and emission norms . These substitute
metals also show good resistance to corrosion and impact . At present, 30-35% of the
auto components are being manufactured out of non – metallics, which would
increase soon to 40-45% .
GROWTH OF INDIAN AUTO INDUSTRY
After the entry of M/s Suzuki Corporation in India, automobile manufacturing
industry has witnessed rapid growth since early 1980’s and by the late-1990's the
261
industry reached self reliance in engine and component manufacturing from the status
of a large scale importer of components and vehicles. Over a period of more than two
decades the Indian Automobile industry has experienced rapid growth driven by the
entry of foreign players and indigenous manufacturers with foreign collaboration.
With comparatively higher rate of economic growth in comparison with the global
powers, India has become a hub of domestic and exports business. In the recent years,
the automobile sector has been contributing around 12% share to the GDP growth in
India.
Currently, the key players in automobile industry include Hindustan Motors,
Maruti Udyog, Fiat India Private Ltd, Tata Motors, Bajaj Motors, Hero Motors,
Ashok Leyland and Mahindra & Mahindra. A few of the foreign players include
Toyota Kirloskar Motor Ltd., Skoda India Private Ltd., Honda Siel Cars India Ltd.,
Ford Motor Company, General Motors, BMW, Audi, Nissan, Volvo, Force motors,
Porsche, Chevrolet, Hyundai, Daewoo, Reva, Toyota etc. Foreign companies have
established their plants in India to share the benefits of market growth and exports.
Many new projects are coming up in the automobile sector. Auto-Expo exhibitions
are being organized every year at Pragati Madan, New Delhi to interact and exchange
views with the foreign exhibitors and share their experiences and technological
advancements.
CURRENT SCENARIO
Commercial vehicle sales are projected to double in 5 years from 0.8 million
in 2011-12. TML and Ashok Leyland have planned to introduce new products and
establish new networks to reach out to their customers for offering a stiff competition
to the new entrant Bharat Benz trucks in the coming years. Force Motors, a
manufacturer of commercial and utility vehicles, launched “Traveller 26” LCV in
October, 2012. The bus is powered by a 129Ps/295 Nm common rail engine made
under licence from Daimler AG. It uses dual mass fly Wheel technology and has
ventilated disc brakes on all wheels. U.S. car major General Motor Company is likely
to launch its hatchback Sail sedan version and multipurpose vehicle, Enjoy by end of
2012.
262
MAHINDRA & MAHINDRA
In recent months, Mahindra and Mahindra group has been growing its auto
manufacturing segment and has entered all segments of the automobile industry with
its overseas forays and acquisitions. Operating margins were lower at 11.4% (12%).
The company performance was boosted with higher sales in vehicles and SUVs by
32%. M & M launched its first premium SUV in October 2012.
MERCEDES BENZ
The Mercedes Benz had started its luxury car sales, in completely knock down
(CKD) condition in India. Its luxury car sales had been zooming at 50% CAGR from
2007 till 2011. However, slow down has started since Jan 2012 and in the first 8
months of 2012, luxury car sales were flat with a modest 8% growth. The company
has sold 250 B-class imported vehicles in 2012, but the market remains unpredictable.
Audi and BMW mini SUV’s sales have increased affecting adversely the company car
sales. It has now introduced B class segment cars in CKD to beat the competitors.
Mercedes-Benz rolled out its first locally manufactured M-class luxury SUV costing
Rs. 45.64 lakhs from its Chakan plant near Pune in October, 2012. In the premium
hatchback segment the company has diesel and petrol variants. The SUV segment is
dominated by diesel vehicles and no petrol SUV is selling fast. Currently diesel
vehicles are available in hatch back and the low and segment sedan cars.
The German Auto giant Mercedes Benz is set to introduce three heavy duty
global standard trucks with the caption Bharat Benz under its 100% owned
subsidiary, Daimler India commercial vehicles pvt. Ltd (DICV) . Indian commercial
vehicles segment will become highly competitive in the coming decade 2012-22.
Competition among the truck manufactures will ultimately benefit the customers and
fleet owners. The company plans to launch 17 products in the range of 7 to 49 Ton
trucks. DICV, Chennai plant has been setup with an investment of 40,000 crores and
employs 2000 personnel. It has a capacity to produce36000 units per annum with 85-
90% local content. The company is planning to provide financing facilities to the
customers through banks.
263
TATA MOTORS LTD.
TATA Motors Ltd (TML) has been losing its market share in passenger cars in
the last few years and sales volumes achieved are lower than expected. Presently
commercial vehicles market share stands at 59.7% and passenger cars market share is
12.3%. Sales volumes of medium commercial vehicles and heavy commercial
vehicles have been impacted adversely. TML’s market share is followed by M/s
Ashok Leyland. Bharat Benz trucks are expected to capture 4-5% market share In
India. Bharat Benz is planning to provide after sales service through 28 dealers
networks in India, and is focused on a long term commitment and not on short term
goals like volumes. The company has fully geared up for a bigger role in future and it
is increasing investments in the plant for tooling, assembly line and capacity
enhancement to roll out all new generation compact car models starting from 2014
onwards.
FORD COMPANY
Ford company had commenced its operations as a marginal player in India in
1995. It became a serious player with the launch of FIGO model in March, 2010. Ford
company CEO feels that hatchbacks are having high volumes in India. It has
established its manufacturing plants in Chennai and Gujrat with a capacity to
manufacture total 4.4 lakh vehicles and 7.1 lakh engines p.a. for export and sales in
India. In order to beat its competitors, the company is planning to introduced around
70% local content in its low-cost ECO-Sport SUV car to make it competitive & obtain
economy of scale through exports and sales in India. Ford company has failed to
attract customers for the sale of its global Fiesta Sedan launched in July 2011.
Currently, Ford has adopted a multi-pronged strategy for the years 2012-2014 to
introduce new compact models and achieve high volumes in India.
NISSAN MOTORS
Japanese Auto Major Nissan Company has established a manufacturing plant
at orgadam near Chennai . It had sold 33,000 vehicles in 2011 and has planned to sell
66,000 vehicles in 2012 , besides maintaining its export volumes at 100,000 vehicles
per annum. The company has already launched six models (including 3 models
264
manufactured in India). The company has launched a 7 seater vehicle Evalia in 2012
and has planned to launch 10 new models including Datsun in 2016.
VALKSWAGON
VolksWagon India has introduced Vento and Polo variant cars in India and
has a market share of just less than 3%. The company sold 6091 vehicles in August,
2011, but the sales have dropped to 4410 vehicles in August, 2012. Passenger car
industry as a whole has witnessed a drop of 15% in recent months. Volkswagon
company opines that India is a mature and developing car market. The company has
planned its growth as a customer driven organization. A large number of factors
affect the sales. it is necesary to keep a continuous watch over the car market. If the
car market continues a declining trend, the industry will experience severe margin
pressures.
BAJAJ MOTORS
The two wheeler major Bajaj Auto sales from April-September 2012 has
experienced a down slide of 4%. Its exports have also declined by 4% during the same
period. Bajaj Auto has 27% share in the two wheeler domestic market and 33%
market share including exports. The company has adopted a strategy to focus on high
end motorcycle segment with its variable cost structure. Customers have become
value conscious today. Mileage is important, but customers want to have more
features. Better technology offers an opportunity to add features in different segments
of vehicles.
TVS MOTORS
TVS motors has also recorded a drop in sales during the second quarter July-
September, 2012. Between April-Septermber, 2012, industry growth had declined to
2%, as compared to 19% in the same period of 2011.
RECALL OF VEHICLES
A large number of auto companies are incurring huge losses in the recall of
newer products. Recall of 7.4 million vehicles worldwide on 10th October, 2012 by
the Japanese biggest automaker Toyota Motor Corporation has dented the reputation
265
of the corporation, besides causing its economic loss. However, the process of
repairing the driver side power window switches would involve only putting heat-
resistant grease on the switches or exchanging them to mitigate the cause of fire.
Honda motors has recalled its 250cc motor bike for repairs.
It has been reported in September, 2012 that the Italian sports car maker
Lamborghini is recalling 1500 Gallardo Coupe and Spider auto models from years
2004 to 2006, because the power steering fluid could leak and catch fire. Lamborghini
documents sent to US safety regulators state that pipes can corrode near the power
steering pump. In rare cases, fluid can leak onto the hot engine and cause a fire.
NEW VEHICLE LAUNCHES
Tata technologies have unveiled a cheap Electric Car eMO (Tata’s Business
Card) at the Detroit show in January 2012 which is priced at $ 20,000. Mr. Kewin
Fisher heads the groups vehicle development team. It weighs 900 kg and according to
Warren Harris, President, Tata Technologies, this vehicle employs intimate
understanding of frugal engineering principles. The vehicle has a steel frame which
meets the existing crash standards and has a seating capacity for four adults.
Tata Motors Ltd. CNG variant of the Nano is going to hit the roads much
before the diesel variant. The diesel variant is expected a year ahead from now. The
CNG model was displayed at the Indian Auto Show 2012, which has a dual fuel
option of CNG and petrol. At a time, when fuel conservation is becoming imperative
across the world, Tata Motors is aiming to make a car, Tata Megapixel that can
deliver up to 100 kilometers from a litre of fuel by using a unique combination of
technology. The Tata group has announced in July 2012 the development of a four-
seater concept vehicle which is a global range extended electric vehicle (REEV)
meant for city driving. This new innovation from the Tata group is expected to be
commercially launched in around three years from now.
The domestic players as well as the foreign companies are exporting their
products today. Indian automobile manufacturers including Tata Motors, Maruti and
Mahindra and Mahindra are the major exporting companies to Europe, Middle East,
Africa and Asian markets. After having firmly established themselves in the domestic
266
market the automobile sector is now penetrating the international arena and vehicle
exports are at their highest levels. Top Ten Players in Indian Automobile Sector
include Maruti Suzuki India, Hero Motors Limited, Tata Group, Bajaj Auto Limited,
Mahindra Group, Ashok Leyland, Yamaha Motor India, Hyundai Motors India
Limited, Toyota Kirloskar Motor Private Limited and Honda Siel Cars India Limited.
Electricity operated Vehicles
National Electric Mobility Mission Plan 2020 is expected to be released in
2012. This plan is likely to focus on laying down the broad policy guidelines for
starting a substantive level of customised mass manufacturing of low-carbon vehicles
in India. India is largely dependent on imported crude oil and is vulnerable to price
volatility in the global oil market. Government has conducted a comprehensive survey
in collaboration with Society of Indian Automobile Manufacturers (SIAM) to
ascertain the market potential for production of the requisite number of electric &
hybrid vehicles and the manufacturing capabilities of indigenous industry.
M/s Mahindra and Mahindra company is manufacturing electric four-wheeled
vehicles and M/s TVS Motor, Hero Electric and Electrotherm companies are
manufacturing electricity operated two-wheeled vehicles in India. Also, electric
bicycles are being produced by M/s Atlas, Avon and TI cycles. Indian can learn a lot
from the initiatives taken by the French government for promoting the manufacture of
low-carbon vehicles in France.
AUTO COMPONENT INDUSTRY
The Indian auto component industry is one of India's sunrise industries with
tremendous growth prospects. From a low-key supplier providing components to the
domestic market alone, the industry has emerged as one of the key auto components
centers in Asia and is today seen as a significant player in the global automotive
supply chain. India is now a supplier of a range of high-value and critical automobile
components to global auto makers such as General Motors, Toyota, Ford and
Volkswagen, amongst others. The evolution of the Euro emission norms also made
the manufacturers rethink their business plans to meet the demand for improved
products. The potential compounded annual growth rate (CAGR) of the auto
267
component industry is estimated to be around 26 per cent in the period 2010-11.
Exports from the auto component industry are estimated to be worth US$ 5 billion in
2010-11.
Important Components Manufacturing Companies include the following:-
· Sona Koyo Steering Systems, Rane Madras and Rane TRW Systems are the key
players in steering systems.
· Bharat Gears, Gajra Bevel Gears and Eicher are some of the major players in the
gears sub-segment. Two international companies, Graziano Trasmissioni and SlAP
Gears India, have set up their base in India.
· Clutch Auto, Ceekay Daikin, Amalgamations Repco and Luk Clutches are the major
players in the clutch sub-segment. Rane Brake Lining and Rico Auto are the key
players manufacturing clutch-facings.
· GKN Drive shafts (India) and Delphi cater to the drive shaft requirements of
passenger cars and Sona Koyo Steering Systems services to the commercial
vehicle segment.
· Brakes India, Kalyani Brakes and Automotive Axles are the three major brake
system suppliers in the country.
· Rane Brake Lining, Sundaram Brake Lining, Hindustan Composites and Allied
Nippon dominate the brake linings sub-segment.
· Jamna Auto and Jai Parabolic are the major manufacturers of leaf springs.
· Gabriel India, Delphi and Munjal Showa are the key manufacturers of shock
absorbers.
268
· Lumax, Autolite and Phoenix Lamps are the key players in the headlights sub-
segment.
· Premiere Instruments and Controls is the leading player in the dashboard sub-
segment.
· Jay Bharat Maruti, Omax Auto and JBM Tools are the major players in the sheet
metal parts sub-segment.
· Lucas TVS, Denso, Delco Remy Electricals and Nippon Electricals are the key
players in this segment.
· Phoenix Lamps, Autolite, Hella India and Lumaxare prominent players
manufacturing sheet metal parts.
The government had taken a number of initiatives to promote foreign direct
investment (FDI) in the industry, that include:-
· Automatic approval for foreign equity investment up to 100 per cent of
manufacture of automobiles and components is permitted
· The automobile industry is delicensed
· Import of components is freely allowed
The Ministry of Heavy Industries and Public Enterprises has prepared the
Automotive Mission Plan 2006-2016, which would promote the growth of auto sector
to achieve the following targets :-
269
· Increase turnover to US$ 122 billion – US$ 159 billion by 2016 from US$ 34
billion in 2006
· Increase export revenue to US$ 35 billion by 2016
· Provide employment to additional 25 million people by 2016
· The automotive sector would be expected to contribute 10 per cent of the
country's GDP by 2016
The auto component industry appreciated the government's announcement of
excise duty rollback being limited to 2 per cent during the Union Budget 2010. The
government had also announced the increase of deduction limit for Research and
Development (R&D) in the sector from 150 per cent to 200 per cent.
CONCLUSION
Automobile industry including auto-components manufacturing industry is
expected to witness higher rates of growth in the coming decades. From a low-key
supplier providing components to the domestic market alone, the industry has
emerged as one of the key auto components centers in Asia and is today seen as a
significant player in the global automotive supply chain. India is now a supplier of a
range of high-value and critical automobile components to global auto manufacturers.
Major auto industry problems include rising oil prices, introduction of fuel-efficient
cars, development of alternative fuel technology and designing of automotives with
recyclable materials.
The potential market for an affordable small car is enormous throughout the
developing world. In the current slow growth environment, inventory is piling up in
all auto manufacturing companies. Auto manufacturers, therefore need to address the
problems of customer demands and market preferences more effectively by
introducing new fuel efficient vehicles, value added and improved aesthetics models
to garner higher market share in the world market.
270
REFERENCES
www.google.com
www.tatamotors.com
Mazlan, C. M. M. 2002. Value Management Principles and Applications. Petalng
Jaya: Prentice Hall.
McCarthy, B. F. 2004. Instant gratification or long-term value? Journal of Business
Strategy, 25(4): 10-17.
McDowell, T. 1996. Value management: Surviiving in the millennium via diligence
rewarded. Management Accounting 74(7): 48-50.
Merriam, S. B. 1998. Qualitative research and case study applications in education.
San Francisco: Jossey-Bass.
Miles, L. D. 1963. Definitions: Lawrence D. Miles value Engineering Reference
Center: Wendt Library.
Miller, R. & Floricel, S. 2004. Value Creation and games of innovation Research
Technology Management: 25-37.
Mitsufuji, T. 2003. How an innovation is formed: A case study of Japan word
processors. Technological Forecasting & Social Change, 70: 671-685.
271
ISSN 2278– 2540 INTERNATIONAL JOURNAL OF LATEST
TECHNOLOGY IN ENGINEERING, MANAGEMENT AND APPLIED
SCIENCE
Innovative Solutions in Construction Industry
B. L. Dhabhai, Research Scholar, Suresh Gyan Vihar University, Jaipur Email : [email protected]
Dr. J.L. Sehgal IP Chairman I.E.(I) , R.S.C., Jaipur Email : [email protected]
Sh. Shashi Kiran, SDME, Railway, Jaipur Division, Jaipur
ABSTRACT
Current industrial development model has failed to ensure sustainable growth.
Development paradigms must be altered to mitigate the impact of development on
climate change and environment. If developed and developing countries continue to
follow the present development model, irreversible damage will be caused to the
global environment. Construction industry is a major polluting factor across the globe.
Industry must adopt suitable measures to arrest the present trend.
Affordable housing for all is a socio-economic problem. It is not a simple
technological issue or a problem of finance. Infact, it is a complex amalgam of a host
of factors. Use of principles of Value Engineering for effecting cost reduction, latest
technology, alternative materials, processes and innovative solutions are required to
meet the emerging challenges that must be tackled in an integrated and synchronized
manner with a strong political will.
Both central and state governments must help them by taking action as a
facilitator, enabler and regulator to provide shelter to those, who cannot afford houses
for themselves. Sustainable development goals cannot be achieved unless the basic
needs of the population for adequate shelter, food, clothing, education and other basic
human needs are met by the society. Value Engineering methodologies are being used
for cost reduction in Affordable Housing Paradigm.
272
INTRODUCTION
Current industrial development model has failed to ensure sustainable growth.
Development paradigms must be altered to mitigate the impact of development on
climate change and environment. If developed and developing countries continue to
follow the present development model, irreversible damage will be caused to the
global environment. Construction industry is a major polluting factor across the globe.
Industry must adopt suitable measures to arrest the present trend.
Inclusive Growth and Sustainable development initiative would not succeed
unless the demands for adequate housing facilities are provided for the economically
weaker sections and underprivileged population by the Govt. The right to adequate
housing is targeted at fulfilling the basic human need and adequate housing facilities
must be assured for every citizen of India. The central and state Governments must
accord high priority to providing affordable houses for slum dwellers, EWS of
society, LIG and MIG-A persons in the country. Cost of land, building materials and
labour have increased phenomenally during the last two to three decades. Use of
principles of Value Engineering, latest technology, alternative materials, processes
and innovative solutions are required to meet the emerging challenges. Economically
weaker sections of the society are unable to acquire proper shelter to meet the needs
of their family. Value system of the entire population and governance procedure must
be improved only then the budgetary allocations will percolate down to the
beneficiaries in real sprit.
Therefore, both central and state governments must help them by taking action
as a facilitator, enabler and regulator to provide shelter to those, who cannot afford
houses for themselves. Sustainable development goals cannot be achieved unless the
basic needs of the population for adequate shelter, food, clothing, education and other
basic human needs are met by the society.
Affordable housing for all is a socio-economic problem. It is not a simple
technological issue or a problem of finance. Infect, it is a complex amalgam of a host
of factors. Innovative solutions are required to meet the emerging challenges that
must be tackled in an integrated and synchronized manner with a strong political will.
Value Engineering methodologies are being used for cost reduction in Affordable
Housing Paradigm.
273
BACKGROUND
Key parameter metrics of climate change, disaster management and building
resilience are interlinked and interdependent. Therefore, business leaders of global
enterprises should adapt to the impacts of climate change on Planet Earth for
furtherance of their common interests. Because of inertia in the system, climate-
change and its impact will continue for several years, even if we take stringent
measures to reduce and mitigate the effects of the GHG emissions across the globe. It
is crucial to lay stress on the use of renewable energy products and traditional
biomass, since it would help to accelerate the provision and availability of electricity
for nearly 2.7 bn persons in the world. All human activities for business will be
affected adversely due to impacts of climate change, pollution and emissions. Nearly
20-30% species will be subjected to increased risk of extinction, if global warming
exceeds 1.5 to 2.5oC. All countries should embark on a path of resource-efficient
development model at the earliest to save the interests of posterity. If the developing
countries continue to pursue an economic pattern similar to the model of developed
countries, it will lead to crises of complexities and ever increasing problems, for the
world population.
EFFECTING ECONOMY IN CONSTRUCTION OF AFFORDABLE HOUSES
Following points for economy are considered:-
1. A few States Housing Boards in India are using special bricks of 19 cm size
(Modular brick masonry).
2. For super structure use 1:6 cement ratio material upto Ground+1 Floor only.
3. Use Honey comb brick (HCB) masonry for providing shelter for economically
weaker sections of society for Windows and ventilators.
4. Pre-fabricated solid or hollow building blocks and components are used made
of Cement Concrete.
OR Use Stone blocks of locally available materials including sand stone, cement &
grit as per mix design according to locally available materials.
274
OR Use blocks of Earth mixed with 5% cement.
5. For Roof - Use prefabricated joists and planks Reinforced brick concrete
roofing (filler slab).
6. For Stairs, water storage tanks, cooking platforms, door frames and doors
using Ferro-cement technology.
7. Use cheaper building materials like, Agriculture and Industrial waste. Use Red
mud waste released from Aluminium plants, Blast Furnace slag, Fly ash of
thermal power plants, rice-husk, coco-nut husk etc.
8. Use brick arches. instead of RCC/stone lintels.
9. IIT Chennai has developed alternative walling & roofing panels glass fiber re-
inforced gypsum (GFRG) to replace load bearing brick walls and RCC slabs in
a multi-storey building (eight storey). Pre-fabricated panels made of GFRG
are also resistant’s to earth quakes. This material is expected to usher in an era
of cheaper mass-scale affordable housing. Results of IIT Chennai research
project have been reported in Hindu Daily of 08.04.2013. This material is
suitable for speedy construction. A GF+1 Building with four units (Two units
for EWS and Two for LIG) has been constructed in IIT campus in 29 days
only, which was inaugurated 08.04.2013. Pre fabricated panels are cut to size
for walls including opening for doors and windows based on room sizes. A
panel has 2 skins of 15 mm thickness that are interconnected at regular
intervals of 25 cm. These cavities are filled with RCC and are used for electric
and sanitary piping purposes.
10. Use Brick Load bearing walls instead of RCC columns.
11. For Flooring:
Use on edge brick floor
OR use 40mm thick grit with cement in the ration of 1:4:8 size or use Indian Patent
surface (IPS) materials (Cement Concrete flooring).
275
OR use Rammed mud flooring (RMF) only and leave it for the allottee to provide
any desired material flooring later.
12. For provision of facilities, use single stack system in multi-storey flats, which
connects sewerage & waster water of WC, bath & kitchen.
SHORTAGE OF HOUSING IN RAJASTHAN
Let us consider a case of Rajasthan State in India. The state of Rajasthan has
the largest area comprising 10.41% in the country and the state can easily adopt an
approach for planned urbanization in future. According to 2011 census figures the
national average urbanization figure stands at 31.16% and in Rajasthan urbanization
figure is 24.89% only. However, the housing shortage is growing every year.
Total housing shortage in Rajasthan was estimated in 2007 as 10.70 Lakhs.
Out of of the above housing shortage figures, 90% belongs to EWS/LIG/MIG-A
category. Housing shortage for needy persons is expected to increase to 13.48 Lakhs
in 2017 and 18.52 Lakhs in the year 2021. Unless proper measures are planned and
executed early in right earnest, the problem can assume gigantic proportions in future.
Person with income lower than Rs.5,000/- p.m. is included in the list of economically
weaker sections (EWS).
Person with income lower than Rs.15,000/- p.m. is included in the list of low income
group (LIG).
Person with income lower than Rs.25,000/- p.m. is included in the list of middle
income group-A(MIG).
The Government of India(GOI) has prepared a national policy guide line policy for
affordable housing. The Government of Rajasthan (GOR) has prepared policy guide
lines as per Affordable Housing policy – 2009 Affordable Housing Policy – 2009 was
prepared by Urban Development ; Housing Department (UDH) of GOR.
Township Policy – 2010 and Slum Housing Policy – 2009, Rajasthan Urban Housing
& Habitat Policy (RUHHP) and Transfer of Development Rights (TDR). GOR had
also constituted the State Commission on urbanization in 2010. A working group was
276
also constituted to plan methodologies on “Affordable Housing for All” with the
horizon year 2030. Chief Town Planner is acting as Advisor for the working Group.
Further more, GOR had planned to take series of measures to mitigate the problem of
shortage of affordable houses in the state.
Housing shortage can be categorized as follows:
Families who do not have a house of their own.
Families living in temporary serviceable houses.
Families living in temporary unserviceable houses.
Obsolescence houses.
Families (of 6 to 9 members) living in congested (one room) houses without any
privacy. They need an additional room.
Families living in semi-permanent house.
A Task Force was constituted by the Central Government to study the problem of
housing shortage in the country and recommend measures to solve the problem.
The report prepared by the Task Force appointed by the Government of India (G.O.I.)
and adopted by the GOR has recommended following guidelines:
EWS/LIG MIG - A
Size 300-600 Sq.ft carpet area Not exceeding 120 Sq.ft. carpet area
Cost Not exceeding 4 times the Gross Household Annual Income Not exceeding
five times household gross Annual Income
EMI/Rent Not exceeding 30% of Gross Monthly Income Not exceeding 40%
gross monthly income
Size of the household was visualized as five members only. It is worth noting that
GOR is constructing affordable houses well with in the above cited limits of the GOI
task force.
277
OBJECTIVES OF AFFORDABLE HOUSING
a. To reduce the shortage of housing for EWS/LIG/MIG-A categories in Rajasthan
b. To take up large scale construction of affordable houses with focus on
EWS/LIG/MIG-A houses.
c. To bring down the cost of EWS and LIG categories to affordable limits.
d. To promote investments in urban housing sector in PPP mode.
e. To involve private developers in the construction of EWS/LIG categories of houses
by offering them attractive incentives.
f. To create rental housing for migrant population in urban areas, and
g. To check further creation of slums in future.
National Commission on Affordable Housing was constituted by G.O.I. and
various states have constituted their state commissions.
AFFORDABLE HOUSING PROGRAM IN RAJASTHAN
More than 70% population cannot afford good or adequate shelter, hence there
is a strong case for taking initiatives to build affordable houses to meet this huge
requirement.
Committees of experts, academicians, scientists and research personnel have
arrived at a consensus regarding preparation of policy guide lines, laying down of
standards, specifications and schedules of locally available cheaper building
materials, technologies and processes for housing construction various categories of
personnel including MIG-A, LIG, EWS and slum dwellers.
Long term actions plans and programmes have been prepared to build the
required number of houses in three or more phases.
Soft bank loans, Govt. subsidies and required financial facilities will be
provided to the beneficiaries as recommended by the, National and State
Commissions (Housing) high power committees.
278
Rajasthan Govt. has formulated following policies:
Affordable Housing Policy – 2009
Slum Housing Policy – 2009
Township Policy – 2010
Transfer of Development (TDR) Rights Policy – 2012
Rajasthan Urban Housing and Habitat Policy (RU HHP) – (under preparation)
A working group was constituted to prepare methodologies on Affordable Housing
vision – 2030. Chief Town Planner and country Planning serves as advisor to the
commission.
Houses are being constructed in Rajasthan under the following housing schemes and
models:-
General Housing Schemes for the urban poor. Houses are constructed under this
scheme in following categories
General, self financing schemes(SFC).
Housing schemes of district development agencies including municipalities.
Private Public Partnership (PPP) Schemes.
New Township Development Schemes and Group Housing Schemes.
Rental Housing schemes
Rajasthan schemes for urban slums:
Basic Services for urban Poor (BSUP)
Integrated Housing and Slum Development Programme (IHSDP) under JNNURM
and Rajiv Avas Yojna (RAY)
Affordable Housing in Partnership in slum areas with prime land values.
Rental Housing Scheme in Slum Areas.
279
Model -I
Under this model land is allotted by ULB’s and Housing Board constructs the houses
land cost will be subsidized by the GOI/GOR. Houses are allotted by ULB’s as
follows:
LIG/EWS – 50%
MIG-A – 20%
Provision for grant of extra FAR/FSI is made
Where houses are constructed by Private Developers or Group Housing
Schemes are 15% of dwelling units or 5% of total residential area of the scheme
(which ever is higher) are earmarked for EWS/LIG and handed over to the NODAL
Agency for further allotment to the beneficiaries.
Model –II
Under this model houses are built by private developers on land owned by
them. Selected developers construct flats on Ground G+2/G+3 format for EWS/LIG
on minimum of 40% of land. These houses are handed over to Nodal Agency for
allotment at pre-determined prices. Special incentives are given to the developer, like
double FAR, TDR facility, waiver of the External Development Charges (EDC) fast
track approval and building plan approval fee. Also, the developer is allowed 10% of
total land for commercial use. Developer would be free to construct MIG/HIG/ flats
on the remaining land as per his choice.
Model-III
Under this model houses are built on acquired land. The selected private
developer can take up construction of EWS/LIG flats under G+2/G+3 format on the
land under acquisition by ULB’s. developer is charged land acquisition cost +10%
administrative charges. All other parameters to be followed and incentives etc. given
to the developer would remain same as per Model-II.
Size and cost of EWS/LIG/MIG-A flat under construction cost to be paid to
builder w.r.t. super built up area is Rs.2.40/Rs.3.75/Rs.7.00 lacs respectively. And
280
cost charged from beneficiaries is Rs.1.90/Rs.3.25/Rs.7.00 lacs sale value is subject to
review from time to time. Government subsidy of Rs.50,000 maximum is allowed for
EWS and LIG persons only.
Model-IV
Under this model houses are built on Govt. land for rental housing or outright sale.
Earmarked Government land is offered free of cost to be selected through open
bidding process. The developer offering the maximum number of EWS/LIG flats built
on G+2/G+3 formats free of cost to the uLB is awarded the project. At least 50% of
houses should be of EWS category.
The developer wil be free to use the remaining land as per his choice for residential
purpose with 10% for commercial use. The rest of the parameters would be as per
model no.II.
Model-V
Under this model houses are built for Slum Housing. Slum housing schemes include
the following:-
Basic services for Urban Poor (BSUP)
Integrated Housing Slum Development Programme (IHSDP) of G.O.I.
Rajiv Gandhi Avas Yojna (RAY). It has two parts:
For slum dwellers.
To prevent creation of new slums
PPP model in slum Housing. FSI & will be permitted as per slum housing policy.
Rental Housing
Rental housing plays a passive role in the housing market. Rental Housing is
created for migrant population & transit accommodation for general public and slum
dwellers on BOT/BOLT basis. by private developers.
281
As per 2001 census, households living in rented houses in Rajasthan is 18.06% or
3,99,766 persons.
Rental housing includes following categories:-
One room & two room flats with WC bath & Kitchen
Dormitories with common toilets in (G+2/G+3) formats
Rooms with toilets only.
Rooms with Community toilets
As per recommendations of the GOI set up Task Force, it is to be ensured that
rent charged is not more than 30% of gross monthly income for EWS/LIG and not
more than 40% for MIG-A, general and slum dwellers For Hire-purchase houses
incentives are given to EWS/LIG, including lump sum of Rs.0.50/- lacs, stamp duty
Rs.10/- Rs.25/- for EWS/LIG and interest subsidy of 5% of EMI upto a loan of Rs one
lacs.
Incentives For Developers
Incentives for developers – include 10% of land for commercial use and permission to
develop 60% of area for HIG/MIG flats for cross-subsidising of EWS/LIG flats.
Finances For Affordable Housing
Initially registration amount and subsequently seed money will be deposited by the
beneficiaries.
Also, bank loans are arranged for the allot tees.
Land For Affordable Housing
Generally 60% of EWS and LIG housing land requirement occupy 30% of
land and 40% o MIG/HIG housing occupy 70% of land in cities. However,
BPL/EWS/LIG persons service the needs of occupants of MIG/HIG housing.
Recommendations of Task Force Appointed by GOI
Additional lands may be brought urban usage on a regular basis by simplifying
procedures and processes for conversion of agriculture land for urban use.
282
Review of Master Planning
Treat Affordable housing as a public purpose.
Conclusions
Affordable housing fulfills the needs of BPL EWS and LIG persons of society.
Affordable housing for all is a socio-economic problem. It is not a simple
technological issue or a problem of finance. Infect, it is a complex amalgam of a host
of factors. Innovative solutions are required to meet the emerging challenges that
must be tackled in an integrated and synchronized manner with a strong political will.