Not just a warm body: Engineering skills at Indian subsidiaries are being recognised by parent companies

When the German carmaker Audi recently invited a few Indian companies to showcase their engineering prowess, Hemant Luthra dumped his laptop and took his Scorpio instead. "I told the Audi Chairman that we had developed this car ourselves. Not just that, we had done the left-hand drive conversion ourselves, and that the car cost just 15,000 euros," recalls the CEO of Mahindra Systems and Automotive Technologies (MSAT). Needless to say, the Audi Chairman was impressed, and so much so that he took the utility vehicle out for a spin and upon return instructed his engineers to pore over it. "No one is for a minute suggesting that we can develop a better vehicle than the Germans or the Japanese just yet, but we are getting there," says Luthra.

Point taken. Long considered just a job shop (blame it on little R&D by local vehicle manufacturers), India is getting serious attention for its engineering skills. The turning point really was Tata Motors launching a made-in-India car, the Indica, for Rs 280 crore in 1998 (an additional Rs 1,400 crore was spent on the plant). Five years later, Mahindra & Mahindra (M&M) stunned the world too with its locally-built Scorpio, which cost a bare Rs 250 crore to develop-globally, developing such a vehicle can cost $2-3 billion (Rs 9,000-13,500 crore). That was followed by foreign carmarkers such as Ford and Suzuki Motor tapping the engineering talent in their subsidiaries to build cars for the Indian market. Most recently, Suzuki's Swift-one of the five cars it plans to launch over the next five years-was built with help from MUL engineers. Actually, MUL shipped out 25 engineers who camped for three years at Suzuki's headquarters in Hamamatsu in Japan, working on things like suspension, seats and the tailgate. Even Ford Motor is said to have tapped local talent for its newly-launched sedan, Fiesta. Says Pawan Goenka, President of M&M's automotive business and the young engineer M&M poached from General Motors (gm) to lead Scorpio's development, "If you go to Michigan or Europe, you'd be surprised at the number of Indian engineers doing high-level tasks, and the good news for us is that they want to return to India now," says Goenka.

What's true of the carmakers is true of the two-wheeler manufacturers too. Bajaj Auto and TVS Motor have significantly improved their design and engineering skills. While TVS has built its new motorbikes virtually alone after it split with Suzuki, Bajaj too has done some spectacular work in product development. Its dtsi engine, for example, was built with little help from Japanese partner Kawasaki. Says Abraham Joseph, the R&D whiz behind some of Bajaj's new products: "The amount of R&D that companies put in will lead to better products, which will become a differentiator."

"I don't think it's a question of if styling work will happen out of India, but of when. Hopefully, NATRIP will spur R&D" Pawan Goenka President (Automotive Business)/M&M

Again, it's not just vehicle manufacturers, but also some component vendors who are making the leap to product design and development. Take Sona-Koyo, for instance. It has developed a new technology in steering systems that it intends to patent (the company wouldn't give details). Similarly, there are other suppliers like MSAT and Bharat Forge that are partnering with vehicle manufacturers to build parts from scratch. Says Ravi Kant, Managing Director, Tata Motors: "India is already becoming an engineering and design hub, the costs over here are half that of the West."

Kant should know. The Indica and the Indigo (an extended Indica), developed in-house, are brilliant examples of what engineering can do. Despite initial quality issues, the Indica has gone on to become a best-seller in the industry. Now, Tata Motors and Tata Technologies, an engineering and design arm of the Tatas, are in the process of developing new products with ground-breaking 3-d design technology instead of the plain vanilla cad that most companies use. "Tata Technologies is possibly doing the most path-breaking work in auto design and R&D, but they are working under a huge veil of secrecy, maybe they are working on the new car," says a senior executive of another automotive company. "The new car" is, of course, the much-anticipated Rs 1-lakh vehicle from Tata Motors that Chairman Ratan Tata has promised to deliver by 2008.

That there's plenty of cheap, but skilled engineering talent to tap isn't lost on foreign carmakers either. GM, DaimlerChrysler, Ford and Honda have set up their own engineering centres in India (the first two in Bangalore, Ford in Chennai and Honda in Delhi). GM's centre, for example, has two distinct units, with one catering to all engineering needs and the other to R&D. "We have 75 engineers working on R&D projects, some of which are global," says Rajeev Chaba, gm's India boss. According to Tata Technologies, the cost savings can be as much as 60 per cent, depending on the nature of development work offshored to India.

This Is Just The Beginning

"The amount of R&D that companies put in will lead to better products, which will become a differentiator" Abraham Joseph R&D Head/Bajaj Auto

The change from being a country of reverse engineering experts to a country that develops its own products from ground up has started for sure, but everybody admits that there's a long way to go. And we aren't talking about high-end skills alone. India lacks basic testing and prototyping facilities. "Products that are engineered in India have, therefore, to be sent to Europe, North America or Japan for testing at great cost, not to mention time," says Krishna Kumar, Director (Engineering), Maruti Udyog Ltd (MUL).

Fortunately for Indian vehicle manufacturers, the government has cleared an ambitious National Automotive Testing and R&D Infrastructure Project (NATRIP) with an outlay of Rs 1,718 crore. NATRIP's six centres (in Manesar, Pune, Chennai, Silchar, Rai Bareli and Indore) will include a wind tunnel, thermodynamic testing (for engine testing), crash-test facilities and an advanced test-track spread over 4,000 acres in Indore. Says M&M's Goenka: "Hopefully, NATRIP will give Indian companies the spur to do even more R&D." Adds MUL's Managing Director, Jagdish Khattar, only half in jest. "Companies in China and Thailand are keeping a close eye on this project because it will give India a leg up on them." Besides, India can compete with foreign countries to grab a piece of the lucrative automotive testing and homologation business.

Another area where India has to work on is in automotive styling. Sure, the Indica and the Scorpio were developed locally, but it took Italy's idea Institute to design the cars. Tata Motors has once again taken the lead here. It already has design centres of its own in Korea, Spain and the UK, besides India, thanks to its acquisition of Daewoo Commercial Vehicle Company and Spain's Hispano Carrocera. Eicher Motors, too, acquired Design Intent, a Detroit-based engineering company, mid-last year. Says M&M's Goenka: "I don't think it's a question of if styling work will happen out of India, but of when." NATRIP is slated for completion in 2010. So, the when may happen sooner than most think.