India is booming in every nook and corner, be it the retail sector or the telecom sector, the real estate or even the panwala next door ! Money is flowing into India and its people like never before. And why not, after all Indian middle class is set to expand nearly 10 times from its current size of 50 million to 583 million by 2025, according to consultancy firm Mckinsey.
Like any other sector Indian Automotive Industry too is booming. I have earlier written about the how car manufacturers are making a beeline in India by announcing their plans to make cheap $2500 (Rupees 1 lac to 1.5 lac ) cars. With the growth in Indian middle class consumer, the Indian Auto Industry is set to grow exponentially. Currently, India has low car ownership rates ? there are 7-8 cars per 1,000 people compared with 300-500 cars per 1,000 people in many Western nations, but annual passenger vehicle sales in India are expected to double to 2 million units by 2010.
However, the fallout of all this growth may turn out to be a Traffic and Environmental disaster. Is any body thinking about where are we going to drive these cars or what will happen to all the emissions of the greenhouse gasses tied to global warming ?
This is a big question that the government needs to answer. I can bluntly say right now that we are not in a position to cope up with this tremendous growth on existing infrastructure. The government is doing its best to ensure that Infrastructure like roads on which these cars will ply are built and widened so that it can accommodate this growth of traffic. However, like in the past – I foresee government to really fall short on this one by very wide margin.
Another issue is the pollution that these news cars are going to cause. I am not sure of how strict are emission standards in India. According to me, we are far behind the western countries, when it comes to clean emission standards (correct me if I am wrong on this one). Even in today’s situation, the pollution levels in India are much above critical levels – and mind you, I am talking about pollution in Tier 2 cities like Pune couple years back. I have not been in India recently, but I really do not think that the situation must have changed too much there.
India has normally been a country of two wheelers. Last 10 years have seen millions of new motorbikes come on roads. These bikes cost anywhere between Rs. 40,000 to 70,000 on average. These users will happily buy a car which is around lac of rupees ($2,500). Just imagine the kind of colossal growth we are looking at !
Tata had announced there 1 lac car couple of years back and they expect it to hit the road by as early as next year. A lot of other car manufacturers have joined the bandwagon, latest being Renault, who very recently announced their $3000 car for India.
With this growth, Can you imagine the toll it is going to take on environment and traffic, Is it worth it? should we rejoice?
I would love to hear comments from readers. What do you think ?
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Author: Arun Prabhudesai
Arun Prabhudesai is founder / chief editor at trak.in. He jumped the Entrepreneurship bandwagon in early 2008 after a long 13 year stint in I.T Industry. You can follow him on twitter @trakin or get in touch with him at admin-at-trak-dot-in or 91.9822575676.Related posts:
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Tata might portray themselves as doing something for the society by launching the Rs 1 Lakh car but we must realize that after all it is a company and its main goal is to make money. Making a 1 Lakh car is sound option for them as the market is very attractive (can leverage the disposable income of the middle class in India). If the Tatas can make a better car than Renault (through innovation and engineering), they can sell this in other markets (Rest of Asia and Africa). They tried doing this with the Indica too. ( It was called Rover in Europe). So, from the business perspective there is a strong reason to go about it. It just not might be for the Indian market !
Regarding infrastructure, I think it will happen the way the IT revolution did it in India.
It is going to be a “push” mechanism , not a pull one.When the IT revolution happened, we saw an increase in th quality of buildings everywhere.Infosys built world class complexes.
The trend caught on.Others too followed this and we saw more more good buildings and there was an increased pressure on govt to fix roads, railways and airports.
Manjit Kriplani of Business Week had a very interesting observation. She said that India’s structure is “inside out and not outside in” unlike China where it is the other way. Improvements are happening inside the country (private sector).Outside structure – improvements in infrastructure changes and FDI investment happen as a result of these inside changes.This forces the govt to make more changes.
Perhaps, with more cars hitting the roads in the next few years, there will be a lot of chaos ( for some time as expected) and only then will we see drastic measures being taken by folks to improve the road, public transport etc.Another aspect that needs to be changed is Indian mindset about following traffic rules.Asking people not to overtake from the wrong side, give the right of way to pedestrians ..things like this…I don’t think will happen in the next few years.With the telecom, aviation, auto, banking and real estate boom in India, I describe all this as “organized chaos”.
The timing of this blog post is quite unique. One of my friends wrote a piece on rediff about this
http://www.rediff.com/money/2007/jun/26tata.htm
There were some mixed responses on his “open letter to Ratan Tata”. You could add yours too!:)
BTW, I was doing some research about the other players in the market who are launching cars. Here is a snapshot
* Tatas will be off block first, with launch slated for next year(2008)
* Renault to tie up with Mahindra to launch a car
* Bajaj Auto plans to showcase its concept at 2008 Auto Expo
* Hero Group working on mini-car, possibly in partnership with Canada’s Bombardier Recreational Products
* Maruti Suzuki is said to be developing a ‘competitively priced’ 660 cc car at Suzuki HQ in Hamamatsu, Japan Used vehicle prices set to come down
* Even Xenetis, a low-cost PC maker, intends to be in this segment.
Indian Blogger,
Very well written comment. Regarding Infrastructure, I am really not sure if we can have that kind to support these onslaught of new vehicles and the harm caused to environment is irreversible. Any which way you see, the car manufacturers may profit causing our environment huge losses.
Thanks for the information provided on the new car launches in India.
I AM SO HAPPY TO SEE THAT THIS PROBLEM IS EXPOSED BEFORE IT HITS US !
Like all over exploitation problems (depletion of natural resources, long term pollution and last but not least, over population) this problem requires pre-emptive action.
If we wait for mindsets to change spontaneously, we may need 1 000 000 yearly deaths on the roads (today there are almost 100 000), 1 000 ppm of CO2 in the atmosphere (today it is between 300 and 400), lacs of deaths due to pollution, and hundreds of billions of hours lost in traffic jams !
We citizens should group in association to first think about solutions, then lobby (by advertising, organising sittings etc..) to promote them in the public view.
In my view, the combination of relatively cheap labour (unlike in western countries, the cost of a driver is much less then the cost of the petrol a vehicle consumes), available technologies (GPS, Mobile phones and all the might of the Indian IT sector) and population density should eliminate rapidly the need for a personnel car.
Want to go somewhere near : select the address on your mobile device, a medium size bus will pick you up and take you (behind this a optimization of all demands would be calculated to regroup people having similar trajectories)
Want to go somewhere far : do the same, and your mobile device will handle the whole itinerary, with all changes required (using this time for long stretches large capacity, fixed itinerary means)
Of course 75 % of public roads should then be reserved for common transportation systems (with of course no jam on them…)
I would happily participate (or even fund) an initiative in this direction.
You can reach me by adding the word atlair, the famous round internet sign, then the word adaptalis followed by the famous COMmercial extension… (this rather sibylline phrase being designed to avoid another nuisance, spammers…)