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Ratan Tata For Low-Cost Manufacturing

Ratan Tata For Low-Cost Manufacturing
Majestic Princess.
October 10
17:15 2014

Ratan Tata, chairman emeritus of the Tata group, has rooted for low-cost manufacturing to provide the impetus the country needs to compete with China.

Tata, who received the GIL visionary leadership award for lifetime achievement hosted by Frost and Sullivan, also stressed on allowing the younger generation to put forward their views if the country wanted to promote innovation.

“We make cars too expensive for the consumer then we look at low-scale high-margins as the way to go. But did we really look at expanding the market? I believe India deserves to have a much larger car market than it does today.

“What it does not have is power of brands from Indian companies —originally two Indian companies, the Mahindras and the Tatas, the rest are international brands. I believe there is a great future for the car industry, a great multiplier effect for the component industry to serve not only the domestic but the international market as well,” Tata said.

Tata compared the automobile markets of India with annual sales of around three million vehicles with China with sales of around 18 million vehicles. China is the world’s largest car market. It was Tata’s vision that led to the launch of the low-cost Nano by group company Tata Motors. The mini-car, however, did not meet the success that was expected from it.

“We have foreign exchange reserves large enough for Indian companies to look at acquisitions of international companies to fill a product or a technology gap. This was not possible some years ago. Twenty years ago if Jaguar Land Rover were up for sale an Indian company could not have acquired it,” Tata added.

Tata Motors bought Jaguar Land Rover from Ford for $2.3 billion at the height of the economic meltdown in 2008.

“Land Rover was our main interest. Jaguar came with it because Ford was unwilling to separate the two,” Tata said.

The former chairman of the Tata group also spoke about his acquisition of Corus, justifying its strategic fit for Tata Steel. “Corus gave us additional steel capacity where we were having problems getting approvals in India. The first couple of years, Corus gave us reasonably healthy profits. Then western Europe went into an economic downturn and that affected the steel industry in Europe dramatically,” Tata said.

Tata was concerned that most innovations were happening outside India, some by Indians.

“All the innovation is happening outside India, by Indians but outside India and we need to ask ourselves why. Part of that why lies in the fact that we are somewhat concerned about new ideas from young people. The same people are able to voice their thoughts, however audacious they may be or ordinary they may be. So most of us in the higher levels of industry have to listen and believe the young. If you are able to do that you will encourage India to be one of the innovators,” Tata said.

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