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Vikram Kirloskar

Vice Chairman, Toyota Kirloskar Motor

CMD, Kirloskar Systems

President, CII

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AUTOMOTIVE India needs to adopt design & development technology for EVs

Dec 9, 2019

…says Vikram Kirloskar, Vice Chairman, Toyota Kirloskar Motor; CMD, Kirloskar Systems & President, CII, in an interview with Shekhar Jitkar. He is optimistic on the economic revival in the country and believes that India can achieve the target of USD 5 trillion economy by 2025. Excerpts from his interview…

Many people have predicted about the economic revival. How optimistic are you in terms of the economy bouncing back on track? Can you put a timeline?

The economy will need some time to consolidate and recover from its current subdued phase. Typically, it takes 2 to 3 quarters for a correction in an economic downturn, as prices moderate and inventories come down. So, I would expect the second half of FY20 to be better that the first half and the next financial year to be better than the current one. One can expect a slow but steady recovery over the next few quarters.

Do you think the series of measures announced recently by the Finance Minister, will be a game changing move for the manufacturing sector? How effective the measures would be in short-term and long-term?

Responding to headwinds, the government has recently announced a slew of measures to provide a much-needed boost to the economy. The announcements included a range of measures such as reduction in the corporate tax rate, provision of additional depreciation to automotive industry, upfront release of Rs 700 bn for bank recapitalisation, addressing the problem of delayed payments, taking steps to help MSMEs and moving towards non-human interface between the tax authorities and tax payers among others.

The interventions have been well designed, and the announcements can be expected to be effective in addressing the key industry concerns. With the RBI also acting in concert, interest rates have been reduced substantially, which can also be expected to drive business sentiment. However, these measures will take time to have an impact and one should not expect any reversal in the business cycle in the short-term.

As the President of CII, can you suggest further steps that the government and the industry should take to attain a double-digit growth?

First of all, we should not be targeting double-digit growth in the current global scenario where all economies are slowing down. The government has set a sensible target of achieving USD 5 trillion economy by 2025 which itself is a tough target, but achievable. This should be our goal.

An immediate step for both the government and the industry should be to step up investments which can drive growth in the medium term. Public investment can be increased by fast tracking infrastructure projects such as roads, railway, airports, waterways, etc, to the extent fiscal space allows. Outstanding payments to the private sector need to be cleared so that they are not cash strapped. Foreign investment should be facilitated with land allotments and fiscal incentives. This is an opportune time to attract FDI that is seeking locations outside China. The Government of India should work with state governments to handhold investors to get them suitable locations in India and help them with all clearances.

Ensuring liquidity and credit availability in the economy is another priority, as any problems in the financial sector will transmit itself into the real economy. Banks and NBFCs need to be well capitalised and have reasonably clean balance sheets. Some attention is required to ensure the stability of the financial sector.

What, according to you, is the competitive strength of the Indian manufacturing industry, today? Do you think the industry is leveraging enough on this to strengthen its global footprint?

Indian manufacturing is competitive within the factory premises. However, external factors such as power, logistics and taxation tend to drive up the cost of doing business. The government is working on these issues and we are confident that suitable solutions will be found. Meanwhile, industry needs to step up its spending on R&D to move ahead and increase its global presence.

In the Indian manufacturing industry, how do you see technology evolving among companies, especially use of digitalisation in manufacturing?

Advanced and emerging technologies are revolutionising and increasingly transforming the manufacturing industry in India, opening new avenues to cater to the ever-evolving needs of customers with cutting-edge solutions. New technologies are key to accelerate the growth of the industry, and establish a holistic ecosystem, helping India realise its potential as a global manufacturing hub along with addressing issues our country is facing like high fuel import bill and pollution.

Can you share your views with us on the government’s target of 30% electric vehicles by 2030? How ready are the OEM and auto-components players for this?

We appreciate the government’s initiative to promote clean and green environment with special benefits to encourage electric vehicles. EVs do bring the benefits towards fossil fuel conservation and lowering of carbon emissions. Efficient use of fuel is critical in reducing carbon emissions and tackling global warming.

The industry is moving towards an era with more alternate cleaner and efficient powertrains where all electrified vehicle technologies [xEVs] will remain relevant. We believe that technology agnostic approach will effectively support smooth mobility technology shift. Today, our country is still at the nascent stage of EV technology, with the key concern being the lack of necessary infrastructure including battery makers. EVs need a nationwide network of charging stations. This can be achieved by a collaborative effort from the government as well as private players. India also needs to adopt design and technology to develop electric cars, whilst manufacturing newer and more efficient batteries.

We also foresee xEVs [HEVs, PHEVs, BEVs and FCEVs] will coexist, based on customer requirement and usage. Ultimately customer/market will decide which technology is suitable rather than fixing target for electrification. Toyota has always been in the forefront working on ever better mobility solutions, being a pioneer in electrification technologies enables it to develop and introduce various types of electrified vehicles such as HEVs, PHEVs, BEVs, and FCEVs based on each market’s local requirements, regulations, road conditions and infrastructure thereby reducing carbon footprint and conservation of the environment.

Would you like to highlight any learnings from Toyota for the Indian manufacturing industry? Tell us about Toyota Production System.

In terms of learning, we truly believe in playing a much greater role than just manufacturing world class cars. Consumers today are knowledgeable about the safer and greener technologies with ever-increasing expectations on enhanced safety features, fuel efficiency, comfort as well as luxury. Catering to these ever-changing needs, we always strive to adopt newer technologies, offer sustainable options and lower costs to drive a transformational change to meet the customer expectations as well as protect our environment.

The Toyota Production System is an important tool which has been adopted to ensure flexible production which takes into account the market requirement and consumer sentiments in terms of volume and preferences. We always work towards maintaining lean inventory throughout the manufacturing system including dealers and suppliers. Based on a ‘pull system’, it helps us regulate how much is required by when and how, thereby regulating production basis the market demand, i.e. customer drives sales and sales in turn, drives production. Our demand and supply operations aim at delivering right car to the right customer at the right time and right place with highest quality.

How much is the current percentage of localisation for TKM? Any plans to increase it in future?

As a manufacturing company, we are constantly trying to increase our localisation levels which range from 60-85%, depending on the model. In our journey of two decades we are constantly focusing on increasing the number of supply base through localisation of parts & components, thereby providing an opportunity for local suppliers to be transformed into world class manufacturing, with strong focus on quality and cost, at par with the global standards.

How do you think Toyota Kirloskar Motor will evolve in the coming decade, given the disruption and collaborative trends in the industry?

TKM is ready for any future trends in mobility. We firmly believe in the philosophy of Kaizen, encouraging us to continuously improve our offerings and services to cater to the ever-changing needs of our customers. We will continue our concerted efforts leading the way to the future of mobility and build “ever better cars and communities” in harmony with nature through sustainable approaches to meet the evolving needs of the customers wherein all stakeholders OEMs, suppliers, vehicle users, mobility providers, financial services and government playing key role.

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  • Vikram Kirloskar has Bachelor of Science (SB) degree in Mechanical Engineering, from MIT USA. He is responsible for partnering with the Toyota group and starting a major automobile manufacturing industry in Karnataka. For this he has been recognised by the Government and presented with the 'Suvarna Karnataka' award. He is currently the President of CII, and also Past President of ACMA and SIAM. He is also involved in many activities at MIT and serves on the Visiting Humanities Committee and Educational Council.

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