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Corporate Professionals EBizWire Sept 2012: Indian Automobile Industry

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Corporate Professionals EBizWire Sept 2012: Indian Automobile Industry Powered By Docstoc
					                                                           Industry of the Month
                                                          “Automobile Industry in
                                                                   India”



eBizWire
     Vol. I Issue. VIII, September 2012




                             Insight



Biz India News                            2


Biz Policy Updates                        3


The Indian Automobile Industry            4


Business Idea of the Month                8


StartBizIndia Discussion Platform         9


Upcoming Business Summit                  10


Contact us                                11




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    Biz India News                                                                         Headlines
•   On August 29, 2012, Automotive components maker Piolax India, a                         Japanese auto parts maker
    subsidiary of Piolax of Japan, inaugurated its first Indian facility at the Sri City    sets up unit at Sri City SEZ
    multi-product special economic zone in Andhra Pradesh. The plant is slated
    to commence commercial production shortly. Piolax is a global manufacturer
    of auto parts such as industrial fasteners, coil springs, flat springs and
    compact units. It has facilities in the US, the UK, China and Thailand.

                                                                                            Volkswagen to invest €100
•   The Volkswagen Group aims to increase output by 10-15 per cent on a
                                                                                            million in India
    €100-million investment at its production facilities in Aurangabad and Chakan
    in Maharashtra. On September 06, 2012 John Chacko, Volkswagen Group
    Chief Representative for India, said the investment would go towards minor
    model changes and upgradation of the two factories. The funds will also
    benefit Skoda and Audi’s domestic operations. The German automaker has a
    1.3-lakh annual production capacity at Chakan, where it makes the Polo,
    Vento and Skoda’s Fabia and Rapid models.

•   On September 05, 2012, In a bid to ‘replicate the success’ of Israel in the             Israel to set up 3 centres of
    farm sector, the Gujarat Government plans to set up a farming educational               excellence on farm tech in
    institute in collaboration with Israel, offering post-graduation and Ph.D               Gujarat
    programmes with practical training and degree from Israeli universities.

•   India and Pakistan will soon sign three agreements – on customs co-                     India, Pakistan to sign 3
    operation, trade grievances redressal and mutual recognition, Commerce                  pacts soon to boost trade:
    and Industry Minister Anand Sharma said on Tuesday. India and Pakistan                  Anand Sharma
    will soon sign three agreements – on customs co-operation, trade grievances
    redressal and mutual recognition, Commerce and Industry Minister Anand
    Sharma said on Tuesday on September 05 2012.

                                                                                            Reliance Cement begins
•   The production of cement from Reliance Cement Company Private Ltd, a
                                                                                            production from Butibori unit
    subsidiary of Reliance Infrastructure Ltd (Reliance Infra), has begun from the
    first manufacturing unit at Butibori, Nagpur in Maharashtra. On September
    04, 2012, the unit would essentially meet the needs of the market in
    Vidarbha, the company said in a communication to the stock exchanges.

•   Storage technology software maker EMC has signed Netmagic Solutions for
    design, architect and run its cloud computing infrastructure for Indian and             EMC ties up with Netmagic
    global companies. As a part of this tie-up, Netmagic will consolidate IT                Solutions
    infrastructure that is hosted on private or public cloud and consolidate it into
    a hybrid cloud computing environment. On September 03, 2012, a hybrid
    cloud environment helps in a mix and match of public and private IT
    infrastructure that can be hosted and accessed as per their requirements.

•   Four leading Chinese companies will visit Ahmedabad in September to
                                                                                            Leading Chinese companies
    explore investment opportunities in Gujarat. The companies- Wuxi Xinje
    Automation, Sunfar, Estun Automation and Zhejiang Chint Electric Co-are                 eye Greenfield projects in
                                                                                            Gujarat
    eyeing investments in greenfield projects and partnerships in Gujarat. The
    Chinese companies will meet entrepreneurs in Gujarat at a business
    conference organized by India China Economic & Cultural Council (ICEC) on
    September 12, 2012.

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    Biz Policy Updates                                                                   Legal Headlines
•   RBI allows direct investment by Indian entities in Pakistan
                                                                                          • RBI       allows      direct
                                                                                            investment     by    Indian
    On September 10, 2012.Reserve Bank of India has allowed Indian entities                 entities in Pakistan
    to make direct investment in Pakistan, giving push for bilateral trade and
    investments. It has now been decided that the overseas direct investment
    by Indian Parties in Pakistan shall henceforth be considered under the
    approval route, RBI said in a notification on Friday.

    Reserve Bank of India has allowed Indian entities to make direct
    investment in Pakistan, giving push for bilateral trade and investments.

    It has now been decided that the overseas direct investment by Indian
    Parties in Pakistan shall henceforth be considered under the approval
    route, RBI said in a notification on Friday.

    The move comes days after India allowed investment from Pakistan. RBI
    said it will make amendments to the Foreign Exchange Management
    (Transfer or Issue of Any Foreign Security) Regulations, 2004, to
    incorporate changes. Bilateral trade between the neighbours stood at
    about $3 billion and is expected to reach $6 billion in the next three years.
    Earlier, Pakistan had expressed concern over certain issues related with
    investments from India.




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                                                                                   The     Indian     Automobile
The Indian Automobile Industry                                                     Industry is broadly classified
                                                                                   into 4 categories:
Introduction:

Choices add the ultimate spice to life and India with the largest number of
people (well almost!) needs a lot of them. That is especially true when it
comes to things majorly characterized by the ever-evolving technology.
And obviously, when there’s a demand, there’s going to be a large
number of industry players competing with each other to bring out the
best possible product in a given price change.

One such industry is the Indian Automobile Industry which very visibly
stays on its toes to bring new models for the domestic and international               •   Two Wheelers form the
markets alike. The domestic players are sincerely trying to meet the                       major     segment of Indian
international standards and yield the best quality.                                        Industry with almost 75%
                                                                                           market share and hence
Nissan's Managing Director in India, Mr. Kiminobu Tokuyama says “India                     leaving all other segments
is a rapidly growing market, so therefore it is very important for global auto             far behind. India forms the
manufacturers". India’s potential as a manufacturing country and as a                      prefect market for two
consumer base is being taken seriously all over the world. India is no                     wheelers because of huge
more just an information technology super power. A country which was                       population the major chunk
more or less ignored by the rest of the Asia, India is now becoming home                   of which is not urban class.
to several Asian brands owing to increasing opportunities and a
progressive economy.                                                                   •   Passenger    Motor Vehicle
                                                                                           Segment      consists    of
With a turnover of almost $59 Million US Dollars, this industry provides                   Passenger     Cars, Utility
employment to 13 million people in the Indian Work-class. This industry is                 Vehicles &   Multi Purpose
one of the most competitive industries because the manufacturers face                      Vehicles.
some challenges like increasing fuel efficiency and reducing emissions
perpetually apart from doing something innovative on a continuous basis.               •   Commercial Vehicles &
                                                                                           Three Wheelers combined
                                                                                           have a market share of 9%
Indian Auto Market- Reasons to cheer:                                                      indicating that it’s the
                                                                                           households which are the
One of the largest automobile markets in the world, India has some                         major consumers in this
remarkable facts to its credit which make it World renowned. The Indian                    industry.
Auto Industry has a bright future because of several factors working
towards increasing demand for automobiles:
                                                                                       •   The automobile industry is
1. Rapid Urbanization: Currently only 21% of the population lives in the                   one     of    the      most
urban areas. Given how India is performing, the figures are hoped to                       competitive      industries
touch 35% by 2020 and 40% by 2030.                                                         because the manufacturers
                                                [Source: www.newgeography.com]             face some challenges like
                                                                                           increasing fuel efficiency
2. Rising per capita GDP: The per capita GDP of India increased from                       and reducing emissions
1200 USD in 2011 to almost 1330 USD in 2012. This is further expected                      perpetually apart from
cross the 2000 mark by 2015. Increasing GDP would mean increased                           doing something innovative
purchasing power and hence increased demand for automobiles                                on a continuous basis.
                                              [Source: www.tradingeconomics.com]




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The Indian Automobile Industry                                                        Statistics India
3. Overall growth of other industries: Industries are usually                         [Source: www.ficci-b2b.com ]
                                                                                               [www.ciiautoserve.in]
interdependent on each other. The effect of expansion of other industries
is bound to percolate to the automobile industry as well. Since transport is            Largest Motorcycle Producer
a basic need of every industry, demand for automobiles will rise with                           in the World
every positive change in an industry.             [Source: www.nasscom.org]


    1
            81%                                                                           2nd Largest Two Wheeler
  0.8                                                                                       Market in the World

  0.6               49%
                             44%     42%                         Growth Rate
  0.4                                         31%
                                                      21%                                   Largest Three Wheeler
  0.2
                                                                                             Market in the World
    0                                                  Source: ibef, SIAM, Nasscom


4. Car buyers getting younger: It is no more a hidden fact that India is
                                                                                        4th Largest Tractor Market in
one of the youngest countries in the world with a median age of almost 26
                                                                                                 the World
years; much lower than the World’s biggest economies. It only shows that
the work class constitutes majorly of young individuals. The car buying
age has been on a decline. Where a person aged 39 used to buy a car in
the year 2000, this age has gradually come down to 33 in 2010. It is only
                                                                                             2nd Largest Scooter
expected to become lesser in the coming years.
                                                                                            Producer in the World

5. Growing Middle class: With the middle class of India growing
annually, benefits of this sector are still untapped. It is the transition from
the lower class to the middle class which converts car into a need from a                 5th Largest Commercial
luxury.                                                                                  Vehicle Market in the World

Other factors like affordability, innovation, infrastructure facilities and price
of fuel also affect the demand for automobiles to a large extent. These
challenges keep the automakers on their toes all the time. With the middle                 5th Largest Bus & Truck
class in India still growing annually, the benefits of this sector are still                 Market in the World
untapped.

Recent Developments in the Industry: [Source: www.ibef.org]
                                                                                        5th Largest Auto Producer in
    •   Ford India: In the wake of increasing petrol prices, it has                       the upcoming economies
        expanded its diesel engine production capacity of its Chennai
        plant to keep pace with the changing demand. The plant that had
        the capacity to produce 2.5 Lakh engines annually in 2010; shall
                                                                                         10th Largest Passenger Car
        now be able to produce 3.4 lakh engines. It also has the capacity
                                                                                             Market in the World
        of producing 2 Lakh cars.

    •   Isuzu Motors Limited (Japan): With a capital outlay of Rs. 1000
        Crores, it is planning to build a Greenfield project to target the
        small commercial vehicle and MUV segments.                                         6th Largest Passenger
                                                                                        Vehicle Producer in the world



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                                                                             Recent Developments in the
 The Indian Automobile Industry                                              Automobile Industry:


   •   Renault (French auto major): By launching it midsize SUV
                                                                              Ford India
       ‘Duster’ in both petrol and diesel variants, it has successfully
       entered the Indian SUV market. Renault has already launched 3
                                                                              Isuzu     Motors       Limited
       more vehicles this year prior to this.
                                                                               (Japan)
   •   M&M Group: M&M Group after spending 4 years in the Indian 2            Renault (French auto major)
       wheeler segment has launched its research and development
       (R&D) center for two-wheelers in Pune with an investment of Rs         M&M Group
       100 Crores.
                                                                              MSIL (India’s largest auto
   •   MSIL (India’s largest auto maker): It shall merge the group unit        maker)
       “Suzuki Powertrain India Ltd” with itself so that all the diesel
       manufacturing facilities are under the same management. The
       merger will be conducted through share swap without any cash
       transaction.

Prominent Players in the Indian Automobile Industry:
                                                                             India       has       some
These are the names which have a brilliant Pan India coverage. Apart         commendable players in the
from this, there are brands which dominate a particular region of the        automobile    sector.  The
country depending on their popularity in that area. This can be studied      market shares of the major
from the following picture:                                                  automotive companies at the
                                                                             end of May 2012 looked
                                                                             something like this;




                                                                                                  (Source: SIAM)




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 The Indian Automobile Industry
 Foreign Direct Investment Policy

 A policy of automatic approval up to 100% FDI has been a boon for the
 Industry. The policy alone has led to a turnover of 12 billion USD in the
 Indian auto industry. No need for licensing and no restriction on import of
 auto components make this sector very attractive for foreign investors.
 Apart from this, advanced technology yet cost effectiveness and efficient
 manpower add to the list of advantages which India offers as a target
 country for investment.

 With a lot of foreign players like General Motors, Toyota, Renault, BMW,
 etc. already carrying out their activities successfully in India, FDI has
 definitely contributed to the growth story of the Indian auto                    Some    Companies            in
                                                                                  Automobile Industry          in
 The Future Forecast:                                                             India
 The future of Automobile Industry is so promising and cheerful that if the
 statistics go as estimated, then, the share of Indian exports in the Global
 auto market will almost triple in the years ahead. The overall automobile
 production in India would expand by 9.6 per cent in 2012-13. The
 Passenger Vehicle Market of India will sell almost 5 million vehicles by
 2017-2018. The Indian Auto Exports will also grow and cross the 17 billion
 USD mark by 2015-2016.




And, there are factors which are demand determinants playing in favour of
the Indian automobile Industry like rising family Income, product innovations,
demographics and favourable duty structure; there is a lot which the industry
is yet to see.
The future looks bright and being an entrepreneur, if someone is looking for
opportunities in this Industry, anything creative/ innovative related to the
automobile industry is bound to work.
                                         (Source: SIAM, ACMA, FICCI and CIME)


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Business IDEA OF THE Month

   CarExchange.com
   From dreaming about buying a superfast car to actually
   experimenting with it during the teenage; from buying a swanky
   car for the first time from your own salary to buying a big enough
   and safe car when you finally have a family of your own; it is the
   same story for all. And now, with the number of independent girls
   on the rise, the car story for them is pretty similar too. No wonder,
   a car is always one of the first things in everyone’s list of must-
   haves.

   But, actually having a car; new, rented or second-hand is a
   separate story in itself. The whole process of choosing a car,
   finding the appropriate dealers, negotiating and finalizing a deal
   and everything else that follows surely; is a cumbersome process.
   What would you choose? Calling up and meeting each suitable
   vendor individually on your own? Or logging on to a website that
   provides all information at one place? So that the only thing that
   you need to do is choose the best deal and make a final call.

   Well you know what we are hinting at. If you are tech savvy, know
   the importance of a good and interactive website and are a car
   lover; you have an interesting opportunity at hand. Taking cue
   from e-commerce based portals; you can create a similar website
   giving various details like: Different types of cars and their
   variants; the authorized company dealers and other vendors for
   selling & reselling of cars, individuals interested in purchase or
   sale, etc. The main idea is to create an online car bazaar so that
   you can bring the buyers and sellers together and facilitate trade
   between them. Such a website will give people a one stop solution
   to all their car woes. What more? You can even add information
   about various service stations for after sale requirements and
   publicize attractive service packages offered by them.

   For starting this; you will have to register your business entity, get
   a web domain registered which shall cost you anywhere from Rs.
   500 and up for a year, hire a web designer for your website,
   collect the database of all the information you decide to put on
   your portal and tie up with a payment gateway like PayPal on your
   website. Last but not the least! Marketing! Everything done, your
   business will depend on this one magic word. To attract people
   you have to let them know first of all.

   You can go a step forward by including car accessories in the list
   of offerings. Keep updating regularly and add special features like
   latest car news for the car enthusiasts and you should be ready to
   keep this business going.


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StartBizIndia Discussion Platform
Mr. Jhunjhunwala is a businessman who wishes to set up an industrial
unit in Gujarat, India. He has a successful retail business which he has
run for 20 years and wishes to transfer to his sons. This however is
also the reason that he does not know how to go about an industrial
set up. What all approvals should he be looking for?

A. Industrial settings are broadly classified into 4 categories in our country.
Depending on the kind of set up, one has to seek the relevant industrial
approval from the relevant authority.

    •   For setting up an SME, an Entrepreneurship Memorandum is
        required to be filed with the District Industries Centre for approval.
    •   For an industrial undertaking that is not an SME but also does not
        require a compulsory license; then an Industrial Entrepreneurship
        Memorandum shall be filed with the Secretariat for Industrial
        Approval (SIA)
    •   For enterprises falling under the compulsory licensing list, a letter of
        Intent (LOI) is required to be filed with the SIA in a prescribed form.
    •   If one wishes to set up a 100% Export Oriented Unit (EOU) or an
        SEZ unit, then an application in the prescribed form has to be filed
        with the Development Commissioner, KASEZ

However, setting up of a business requires taking care of a lot of aspects.
Various other approvals that are required for an industrial set up are as
follows:

Registering the Business Entity:

    •   Registration with the Registrar of Firms is required if you choose to
        have a proprietary concern or a Partnership firm
    •   The Registrar of Companies handles applications for forming of a
        Company or a Limited Liability Partnership (LLP)

Approvals for the Land:

Again the approvals will depend on the type of land sought.

    •   For allotment of plot in an Industrial estate, approval from the
        Gujarat Industrial Development Corporation (GIDC) is required.
    •   The District Collector shall approve any applications for allotment of
        Government Land.
    •   Agricultural land can be purchased through negotiation for which no
        approval is required per se.


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    Upcoming Business Summit
                                                                                      International
   Indian Home Congress 2012
    India’s first of its kind of show on Home Décor, Home furnishing, and
    Home Improvement Sector.                                                           •   Auto Show India 2013

    Date: - October 04, 2012 to October 05, 2012
    Venue: - Hotel Claridges, Surajkund, Delhi/NCR

    Forthcoming Auto Industry related Events
    [Source: www.siamindian.com]


   Auto Show India 2013
    With India emerging as a leading export hub for automobile companies
    and Sri Lanka coming up as a an important country for business
    opportunities in the automobile sector for India; this second edition of the
    Auto Show India organized by the Society of Indian Automobile
    Manufacturers aims to establish good relations with the Automotive
    market of Sri Lanka. The show will feature the latest vehicle models and it
    is hoped that this edition will see far more visitors than the last time.
                                                                                      National
    Date: - January 04, 2013 to January 06, 2013
    Venue: - Bandaranaike Memorial International Convention Hall (BMICH),              •   Indian Home Congress
    Colombo, Sri Lanka
                                                                                           2012
   Bus & Utility Vehicles Show 2013
    Considering the importance of buses in the country and the fact that the
    Indian bus industry is one of the largest in the world; SIAM is organizing
    the Bus & Utility Vehicles Show 2013. Given the situation when utility             •   Bus & Utility Vehicles
    vehicles are rapidly seeing a lot of takers whether it is an SUV or an MUV;            Show 2013
    this show will focus on showcasing the latest developments in the
    technology and provide a platform for manufacturers to launch their
    product and communicate with the prospective customers directly. This
    will help the manufacturers understand the requirements of the target
    audience better.
                                                                                       •   Motor Show Bangalore
    Date: - February 14, 2013 to February 17, 2013
    Venue: - India Expo Mart, Greater Noida, Delhi-NCR, India                              2013

   Motor Show Bengalore 2013
    A show first of its kind, it is being organized to help automobile
    manufacturers to present latest technology developments, innovations in
    designs and features, latest products, etc to prospective customers. It is
    not unknown that this city is the technology centre of India and one of the
    most financially sound cities too. With a large pool of young working
    population, Bangalore is definitely bound to benefit from the show.

    Date: - April 04, 2013 to April 07, 2013
    Venue: - Bangalore International Exhibition Centre (BIEC), Bangalore

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                                        Contact Us


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              E: neha@indiacp.com

               D: +91.11.40622239




                                                                      A Venture of




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Disclaimer:

This paper is a copyright of Corporate Professionals (India) Private Limited. The entire content of this paper have
been developed for the new startups. The author and the Company expressly disclaim all and any liability to any
person who has read this paper, or otherwise, in respect of anything, and of consequences of anything done, or
omitted to be done by any such person in reliance upon the contents of this paper.




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DOCUMENT INFO
Description: When there’s a demand, there’s going to be a large number of industry players competing with each other to bring out the best possible product in a given price change. One such industry is the Indian Automobile Industry which very visibly s tays on its toes to bring new models for the domestic and international markets alike. The domestic players are sincerely trying to meet the international standards and yield the best quality...