Role of Automobile Industry in Employment Generation in India: An Analysis of TATA Motors and Mahindra & Mahindra

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1 23 Role of Automobile Industry in Employment Generation in India: An Analysis of TATA Motors and Mahindra & Mahindra Santosh Kumar Maurya UGC- NET/JRF Research Scholar, Department of Management Studies Nehru Gram Bharati University, Allahabad Abstract The Indian automotive industry is being rapidly integrated into the global automotive supply chain and global automotive companies are looking to India not only for its burgeoning consumer market but also as an efficient supplier base. New technologies in the production process are constantly being introduced, and processes in the sales and service arena are shifting to meet the changing market. Today, it is amongst the main drivers of growth of Indian economy. Tata, Hyundai, Fiat, Ford Motors, TELCO, Maruti Suzuki, Hindustan Motors, Mahindra and Mahindra and Escorts has opened up numerous opportunities for persons with an automobile engineering, mechanical engineering and technical diplomas in this area, not only technical s there are lots of middle level and low level workers also. With the establishment of many automobile and ancillary manufacturing and assembling plants, both in the private and public sectors, employment avenues are expanding in the fields of design and manufacturing of automobiles. Increase in the production of commercial vehicles/ passengers cars, automobile sector can expect to have a wide range of opportunities both for wage paid and self-employment ventures in the coming years. In fact, the automobile industry is the barometer of the economic and social transformation taking place in the country. It is one of the major sources of employment and is likely to generate employment for thousands of new hands directly and indirectly, in near future. Keywords: Employment, Automobiles, Opportunities, Manufacturer. Introduction The automotive industry in India is one of the larger markets in the world and had previously been one of the fastest growing globally, is now seeing flat or negative growth rates. India's VOL. 1 ISSUE 12 DEC

2 passenger car and commercial vehicle manufacturing industry is the sixth largest in the world, with an annual production of more than 3.9 million units in According to recent reports, India overtook Brazil and became the sixth largest passenger vehicle producer in the world (beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada, Mexico, Russia, Spain, France, and Brazil), grew 16 to 18 per cent to sell around three million units in the course of In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. In 2010, India beat Thailand to become Asia's third largest exporter of passenger cars. As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second (after China) fastest growing automobile market in the world in that year. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015, no longer 5 million as previously projected. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. The majority of India's car manufacturing industry is based around three clusters in the south, west and north. The southern cluster consisting of Chennai is the biggest with 35% of the revenue share. The western hub near Mumbai and Pune contributes to 33% of the market and the northern cluster around the National Capital Region contributes 32%. Chennai, is also referred to as the "Detroit of India" with the operations of Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, and PSA Peugeot Citroën is about to begin their operations by Chennai accounts for 60% of the country's automotive exports. Gurgaon and Manesar in Haryana form the northern cluster where the country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor near Pune, Maharashtra is the western cluster with companies like General Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Jaguar Cars, Fiat and Force Motors having assembly plants in the area. Nashik has a major base of Mahindra & Mahindra with a UV assembly unit and an Engine assembly unit. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster. Another emerging cluster is in the state of Gujarat with manufacturing facility ofgeneral Motors in Halol and further planned for Tata Nano at their plant in Sanand. Ford, Maruti Suzuki and Peugeot-Citroen plants are also set to come up in Gujarat. Kolkata with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country. Car Companies in India Latest Trends and Developments India as a nation might be seeing a rate of economic growth that is the lowest in this decade but some sectors are still performing well, as per experts and the automobile industry is one of them. In the first 4 months of the fiscal car sales have increased in India by 5.6 percent as per statistics provided by the Society of Indian Automobile Manufacturers (SIAM). The Society had set a target of percent for the period and the growth is still lesser than that. However, compared to , when the industry was pretty flat, these figures represent a better VOL. 1 ISSUE 12 DEC

3 condition. IHS Automotive has forecast that by 2016 the yearly rate of growth of sales for the automobile industry will be 10.9 percent taking the sales figure to approximately 4.88 million. Government initiatives for Indian automobile industry The Indian Government has introduced the National Automotive Testing and R&D Infrastructure Project (NATRIP) that will look to create core competencies in the national automotive sector that are at par with global standards. This project will also help the Indian auto industry become a key part of the world economy. The project will aim to create the very best infrastructure in testing, research and development, and validation and help the industry gain international repute. The project will invest INR 1718 crores in 3 automotive centers across the country for establishing top class homologation facilities. These centers are: Table No.:1 Name Zone Manesar Ahmednagar and Pune Chennai Northern India Western India Southern India The government has also announced the Automotive Mission Plan for and aims to make India a global center for the automobile industry. The plan aims to focus on the following areas: Making and designing of automobiles Making and designing of auto components It also looks to take the industry output to 145 billion US dollars by 2016, which is expected to account for at least 10% of the GDP by then. This can also generate extra job opportunities for 25 million people by that time. The plan also aims to make sure that the industrial production reaches the INR crore marks by 2016 at present the figure stands at INR crores. The plan will also look to increase the role played by this sector vis-à-vis the national economy and other important parts of it. The plan also looks to bring up the automobile certification and testing facilities in India at par with global standards. Indian Automobile Industry Major Bodies The Department of Heavy Industry of the Ministry of Heavy Industries and Public Enterprises is VOL. 1 ISSUE 12 DEC

4 responsible for promotion of the national auto industry s development and growth. It helps the industry in its achievement plans in the following ways: Policy initiatives Promotion of technological up gradation and collaboration Appropriate interventions for trade and tariff restructuring Promotion of research and development The Society of Indian Automobile Manufacturers (SIAM) is the leading industry body and represents 46 of the top vehicle and engine makers in the country. It is a crucial medium of communication for the industry with governmental, international and Indian organizations. It functions in association with the various companies and is an active participant when it comes to creating rules, policies, and regulations for the industry. Table No.:2 Employment Generations in Automobile Sector of India Year Employment status (in millions) Source: Literature Review According to India brand equity foundation 2012, manufacturing sector holds a key position in the Indian economy. The ability of the manufacturing sector to absorb excess labor from the agriculture sector and shift the same to services renders it the driving force in the development process of an economy. While, the Indian manufacturing sector has witnessed remarkable growth in recent years; its contribution to GDP and employment is well below its true potential. There is a need for strong commitment from the government as well as the industry for the sector to enter the next orbit of high growth and employment generation. Ministry of External Affairs Government of India, 2012 says that Automobile industry one of the key drivers of the national economy as it provides large-scale employment, having a strong multiplier effect. Being one of the largest industries in India, this industry has been witnessing impressive growth during the last two decades. According to Sbhutani, Jun 2006, the automobile industry in the country is one of the key sectors of the economy in terms of the employment opportunities that it offers. The industry directly employs close to around 0.2 million people and indirectly employs around 10 million people. The prospects of the industry also has a bearing on the auto-component industry which is also a major sector in the Indian economy directly employing 0.25 million people. VOL. 1 ISSUE 12 DEC

5 According to Rinki chakrabarty and others, in May 2003, they have found that over the last decade, the Indian automobile industry has become more competitive. India now has developed a skilled labor force in the automobile industry with the entry of global players and also growth in the domestic industry. Objectives of Study 1. To investigate the employment generation in Indian Automobile Industry. 2. To test the role of automobile industry in employment generation in India. Hypothesis H 0 : There is no significant role of Automobile industry in employment generation. H 1 : There is significant role of Automobile industry in employment generation. Research Methodology The study is based on social research. In this paper we have used available facts or information to analyze the factors and evaluation of the data. Scope of Study In the proposed study we will only investigate the employment generation in those companies which have their production plants in Indian automobile industry. In this way we will try to investigate growth of employment and upliftment of social status of employees. Source of Data This study is purely based on the secondary data such as annual report, magazine, news paper, Indian automobile report, and automobile company website. Population Size We take entire automobile industry those who have established manufacturer plant in India. Sample Size This study involves the analysis with respect to the sample of two automobile manufacturer companies in India namely- TATA and MAHINDRA & MAHINDRA out of 34 companies which are engaged in manufacturing(in fact 122 automobile companies have business in India). These two companies cover 21.77% of market share in automobile industry in the country. Findings We select only two automobile (car) manufacturers company TATA Motors and Mahindra &Mahindra. In the respect of employment growth we choose five years employment data to In five year data TATA Motors increase their employees 23,230 to 29,217 and VOL. 1 ISSUE 12 DEC

6 Mahindra & Mahindra increase 5,690 to 15,147 (Table no.3) employees in their company. The last five years employment growth tally as per Table No.4 shows that Tata Motors group is 25.77% and Mahindra & Mahindra group have massive change of more than 160%. This result is also a danger alarm for TATA group for future growth of Mahindra And Mahindra. It may be HR strategy of M&M for take over the largest share of Indian Automobile industry near future. In India there has 34 car manufacturers company. In automobile industry the employees has semi skilled and skilled person. With the reference of this five years data we say there is lots of employment generation in automobile industry. Table No.:3 Employment generations in TATA and Mahindra &Mahindra Source: ( Sixty-Seventh Annual Report page-59 Table no.:4 Comparative growths in employment opportunities in Tata and Mahindra &Mahindra in last five years Source: Mahindra & Mahindra annual report march-2012 Suggestions The automobile industry in India, there is lots of opportunities for the employment. This dynamic industry currently accounts for almost 7% of our GDP and employing about 17 million people both directly and indirectly. Contribution of India in global auto industry development is VOL. 1 ISSUE 12 DEC

7 becoming increasingly important. There are so many associate company related to automobile industry such as tyres, lights, rubber parts, steal parts, etc. Need of searching such resources by which instead of petrol, diesel, and LPG gas needed to search other alternative which should be cheaper for running of the automobile industry. In our suggestion government should be provide subsidy in automobile industry and help in new research and development for the future growth of employments generation in automobile industry. Reference 1. date and time 26/12/12, 06:15 AM /12/12, 06:20AM 3. Nair, Vipin V. (7 September 2009). "Suzuki, Hyundai's Indian Car Exports Beat China's". Bloomberg.com. Retrieved 1 September /12/2012, 07:30 PM 4. Gulati, Nikhil (9 September 2010). "India Car Sales Touch Record High". Online.wsj.com. Retrieved 28 November /12/2012, 01:32PM 5. "India second fastest growing auto market after China". Thehindubusinessline.com. 10 April Retrieved 28 November. 30/12/2012, 08:23 PM /12/2012, 08:35PM /12/2012, 09:12PM Generation-in-India.pdf,date-07/01/2013,03:02pm pdf,date-07/01/2013,03:40pm /01/2013,time-05:37pm Annual Report page-59 date-4/1/2013time-05:00pm Annual-Report page-16 date-4/1/2013 time-05:45pm annual report pdf date-4/1/2013, time-06:27pm Annual-Report-2010.pdf date- 4/1/2013 time- 06:56pm 16. Mahindra & Mahindra annual report march-2012 date-6/1/2013 time-12:05am 17. Mahindra & Mahindra Annual report pdf page-32 date-5/1/2013 time- 10:22 PM SIAM ANNUAL CONVENTION 2012 date-08/01/2013,time-05:11pm VOL. 1 ISSUE 12 DEC

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