Donald Trump and Narendra Modi have many things in common. Both of them are disliked by a large section of the popular media. Job creation was a major poll promise made by both of them. Both Donald Trump and Narendra Modi are focusing on the manufacturing sector for job creation.
It was interesting to hear President Trump appealing automakers to set up factories in the United States. He has gone one step ahead and talked of stringent taxation measures if vehicles are manufactured outside the United States and then sent there for sale. But like Mexico Wall tax, I could not understand how this would benefit the American consumers.
I remembered the long serving left government in Bengal wooing Tatas for the nano plant in Singur. The Singur plant did not happen due to public resistance led by Mamata Bannerjee. But Nano as a product also failed and recently we learnt that the product was a major factor in the Mistry-Tata discord.
Government of India has a flagship program called “Make in India” which intends to make India a global manufacturing hub leading to job creation. The auto industry is also a focus industry in the “Make in India” initiative. The government has made a sector wise presentation of the report card of “Make in India” in the website.
But the report card on the auto sector could not cheer me up. The report card talked about FDI inflows into the auto sector in the last two years. But there was no data on job creation which is the primary focus of “Make in India”. The report presents sales data that indicate bad market condition. Export, which is a prime goal of “Make in India” remains flat in the last two years. I wonder why such a dismal report card is presented at all. The report in one place notes Man Trucks India Pvt Ltd as Man Force Trucks, but the collaboration between Man, Germany and Indian automaker Force Motors ended way back in 2012. It raises doubts whether the report was prepared with reasonable seriousness.
The auto industry’s performance is cyclical. The Indian auto industry is in a difficult phase for several years now despite India being the fastest growing economy as claimed by the government of India. Ford, which tops the FDI list is not doing well in sales. The joint venture between Japanese car maker Nissan and Indian automobile company Ashok Leyland ended because of bad market condition. The Mistry –Tata feud brought to light an important point that Tata Motors which is the industry leader used its subsidiary finance companies to sell Tata vehicles just to maintain higher market share and thereby adversely affecting profitability of the finance companies.
Donald Trump is more of a businessman than a politician. I could not understand why he is banking on the auto sector so much at a time when the US economy is not growing at all.
Back home, Assam minister Chandra Mohan Patowary had said that leading Indian automobile company Mahindra would set up a plant in Assam. We have not heard anything about this of late. It will be great to have some positive update from Mr Patowary or Mahindra officials.