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Rajiv Singh
Presenting a tempered vision of the technological
future, Tata Motors MD Ravi Kant foresees a straight
drive for the company as the industry goes through a
period of exponential growth
As
increasing liberalisation norms transform the Indian
economy, the transportation sector is set for explosive
growth. The personal and public transport segments are
still in an early stage of growth, but you don't need
a crystal ball to see the sweeping changes waiting to
happen.
The government's massive infrastructure
development programme is connecting thousands of towns
and villages all over the country. The building of roads
where dirt tracks existed before is spurring communication
and commerce. Suddenly, cars, buses and scooters are
plying where only bullock carts used to. A whole new
world of opportunities is opening up for our rural communities.
Rapid growth will inevitably
bring problems in its wake. This doesn't mean we should
curtail growth; instead, if we have to bring about an
improvement in the quality of life of our people, we
must remove constraints. The challenge will be to ensure
there is greater discipline in the development process,
more certainty.
Buses to the fore
The pace of growth in personal and public transport
in urban areas is just as spectacular. Television, telecommunications
and the internet have shrunk the world and expanded
our aspirations. We see the choices available to consumers
in developed countries and want the same goods. Rising
incomes, especially among the young, are also fuelling
the demand for cars and bikes.
The stage is also set for an
exponential increase in the use of public transport.
All-round national development is driving people's need
and desire to travel. Impeding factors, such as increasing
congestion in the cities, and the fact that not all
have access to personal transportation, will fuel further
growth in the public transportation segment.
Future modes of public transportation
will vary, depending on the structure of a particular
city, and could be either above- or under-ground, and
could involve high capacity bus systems or monorails.
As elsewhere in the world, buses are likely to come
to the fore in a big way, and account for a large percentage
of the total transport fleet. Russia and China are good
examples of this phenomenon.
Safety first
As we look at increasing growth in transportation, we
will also need to address issues of safety. Because
of present constraints, many people travel on two-wheelers
today. It is not an uncommon sight to see entire families
travelling on these vehicles, which is very unsafe.
We need a more reliable platform for personal transport.
I am also looking at the public
transport sector adopting certain safety and comfort
standards. For instance, buses are not covered by any
standards, though they should be. Bus-body making is
an unorganised industry today.
If we look at the emissions aspect,
and consider how things have progressed from, say, about
ten years ago, clearly there has been a huge amount
of reduction in emissions. The country has moved progressively
through the Bharat I, II and III stages, and figures
suggest an overall reduction in emissions of around
85-90 per cent.
As we move forward, I would say
that India is fairly close to where Europe is. If Europe
is at the Euro 4 level today, then we would be applying
the same standards in 2010 — in effect, with a
five-year lag, which is eminently acceptable for a developing
country.
Fuelling the future
Fuels are another important issue we need to grapple
with. Petrol and diesel both have their advantages and
disadvantages, but despite popular perceptions, today's
diesel is a much cleaner fuel — no longer the black
smoke-spewing polluter of popular imagination.
If priced the same as petrol,
the cost of using diesel is much less, for thermodynamically
it is more efficient than petrol, at least by 25-30
per cent. As fuel prices go up, and import bills rise,
it stands to reason that a diesel-based transport industry
will use less fuel — and consequently pay less
for its fuel bills.
Advanced countries such as Europe,
US and Japan, where people are very conscious about
pollution and emission norms, have been encouraging
diesel. The US which predominantly uses petrol as a
fuel, has now begun to drift towards diesel. In Germany,
close to half the vehicles sold use diesel. Diesel is
now a popular choice in India as well.
Among alternative fuels, CNG
is a good medium, but it has major challenges in terms
of availability and distribution across the country.
We also need to look at alternatives
to hydrocarbons, as prices keep going up, and the mismatch
between supply and demand continues. Many experiments
and pilot projects have been initiated, including using
jatropha with diesel and ethanol with petrol. We too
are doing a lot of work along these lines. Over 50 staff
buses in Pune are running on a jatropha-diesel mix.
We have experimented with ethanol as well, but not much.
While a lot of research work
is being done in this area, I think it will take a long
time — at least seven to ten years — before
we arrive at a workable system. All things considered,
the induction of these derivative fuels is still a long
way off.
Hybrids and hydrogen-based vehicles,
I feel, are even further out in the future. We are doing
some work in these areas; but even in advanced geographies
such as the US, hybrids are yet to justify themselves
as an economic solution.
Strategies for tomorrow
Looking ahead, there are strategic issues that businesses
need to address. One such discussion involves moving
from low-cost production to high-quality products. Frankly,
in today's environment, I don't see a conflict between
the two. I would argue that it's not an either/or situation
at all, for I can be a low-cost producer and yet steal
a march over others through innovation.
In fact that's how the strategy
is unfolding for us. The equation that a good vehicle
can be made at a lower cost is emerging quite clearly
with advances in technology and development of appropriate
business models and product packages. A case in point
is Ace, our small truck, launched in 2005. As a four-wheeler,
it is positioned against the big three-wheelers, and
gives customers what they want, and at a competitive
price, while meeting safety, emission and comfort norms.
The Ace is doing pretty well.
Similarly with our low-priced
car. It will have all the features essential for comfort
and safety. By applying effective technologies and innovative
solutions, we will try and ensure that it remains a
low-priced vehicle, without compromising on its quality.
As economies liberalise, competition
will only stiffen, be it in India or elsewhere. Compared
to us, there is a gap in quality and performance that
works in favour of foreign brands; on the other hand,
there is a gap in cost that is not to their advantage.
What foreign companies would
like to do is to retain that positive gap in performance
and quality, and reduce the gap in cost. Companies like
ours, which have an advantage in cost but an adverse
gap in quality and performance, will aim to close the
gap in quality and retain the gap in cost.
These will be the two key strategies
for the future. I feel that companies like Tata Motors,
which have the cost factor on their side, will have
an advantage. Time alone will tell if I am right!
Steps ahead
But technology and cost competitiveness are only one
part of the story. It is the principles with which the
Tata Group does business that will be the real differentiator.
Our commitment to the communities, the countries we
operate in, sets us apart from other multinationals.
As the largest automobile
company in India, Tata Motors has to keep at least half
a step ahead in an evolving market in order to maintain
its leadership position. I am confident our company
will adapt to expanding opportunities in the market
even as they emerge, and maintain its leadership.
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Uploaded on August 28, 2006
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