Outrageous Tata: India's Iconic Carmaker Says It's Time to Grow Up
Can you name the CEO of a single Chinese automaker? Didn't think so. But what about India? Much easier: Ratan Tata is at least as well-known as his Western counterparts (he's actually chairman of the eponymous Tata Group, which does a lot more than just build and sell cars). So when he starts making statements about his country's burgeoning car business, people listen. Even when what he says is usually in the interest of Tata Motors (TTM) first, India second.
Not ready to stand on its own four wheels
Here's a sample of Tata's recent thoughts, from Rediff.com:
At a time when the Indian automobile industry is strongly opposing lowering of import duty in the proposed India-European Union Free Trade Agreement, Tata Group chairman Ratan Tata has favoured cutting tariff on vehicles and components coming from overseas.Obviously, the whole point of import duties is to give the indigenous Indian auto industry a chance to develop its own sources of auto manufacture and supply. However, like most developing-world countries, India doesn't have much in the way of its own auto industry, as far as soup-to-nuts design, engineering, and assembly goes. So Tata is basically correct in his analysis.In an interview to the market research firm JD Power, Tata said such high import duties are unrealistic and create an artificial barrier of protection for local companies.
He also said India does "not have an automobile industry" as "we have assemblers of foreign brands"....
Wake up and smell the curry
Of course, that doesn't mitigate his scolding tone. What he's effectively telling his domestic competition is that they're still playing in the minor leagues, while Tata Motors is in there with the big boys. Under this arrangement, Tata can benefit greatly from free trade. Other Indian carmakers, in Ratan Tata's view, will just have to tough it out for now.
This is leadership, of a sort. On the one hand, it's not really what the majority of automakers (mere "assemblers," in Tata's view) in India want to hear. On the other, it's a bold tonic from an international businessman who has over his career developed a global vision for India that's positioned the country to be a far more democratic growth opportunity in the developing world than China.
Listening to Ratan
Taken on its own own, Tata's perspective is, well, irritatingly self-aggrandizing. In a single rhetorical blow, he's declared an economic hierarchy in India with, you know, the Tata Group on top. But in the grand scheme of things, he's entirely correct: India will never develop a truly competitive global auto industry if it continues to carefully nurture mediocrity at home, or if it's content to be a low-cost labor hub for outsourced Western prouction.
But there's a subtle message as well in what Tata is insisting: that India must aspire to the standard that's prevalent among the Big Boys: Toyota (TM), General Motors (GM), Volkswagen, Ford (F). Contrast this with China, where joint-ventures rule the scene (because the government says they must). JVs are all well and good, but the idea is that the Chinese will gain experience and technology through government-mandated collaboration. At some point. When the collaborators, against their interest, decide to turn the keys over the Chinese. You think GM is going to exit China quietly, now that it's doing a better business there than in the U.S.?
Ratan knows what he's talking about, and as internationalized as he is, he ultimately wants what's best for India. Even when it isn't what's best for a lot of Indian carmakers in the short term.
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