We are well geared up for the transition to electric vehicles: Sunjay Kapur

In an interaction with Aggam Walia and Anil Sasi, Kapur spoke about the importance of research and development (R&D), the scope for automating industrial processes, and the China-plus-one strategy. Edited excerpts:

Is the auto component industry in India ready for the EV transition?

Globally, the transition to EV is very significant and traditional large manufacturers have moved or are in the process of moving to electric. Therefore, the component industry, even in India, is also well geared up because that is how the supply chain works. In fact, three years ago, during my first year as Automotive Component Manufacturers Association of India (ACMA) president, we did a survey of the executive committee, and 60 per cent said they are ready to supply components for EVs immediately. Forty per cent said they would be ready in a year, and I’m talking about three years ago. This was the executive committee, which is a good illustration of our membership. As an industry, we are ready to supply components for EVs. What goes into an EV is obviously in some areas significantly different, in some areas it is exactly the same. If you look at a seat, it’s always going to be a seat. If you look at a headlamp, it’s always going to be a headlamp. Now, will mirrors change to cameras? Possibly. Will the torque requirement of certain parts be different? Definitely, because electric cars are much faster. So, the end requirement may be different, and therefore, you may require certain processes that are different from internal combustion engine. However, overall, the vehicle stays pretty much the same, other than the engine component and the addition of software.

Will some of the components being manufactured currently become redundant in the future?

I think some of them will and yet, there are new opportunities that come around. With EVs, there will be opportunities in the vehicle, with software, with telematics, and with intelligence. Our tagline at Sona Comstar is EPIC, which stands for electric, personalised, intelligent, and connected. I think different business models will also emerge as a result of us disrupting this industry, or this industry disrupting the way we work. I wouldn’t say that the component manufacturers will go out of business. Will change happen? Yes.

How crucial is investing in R&D for this industry?

If you don’t invest in R&D, you will be left behind in the value chain. This is a highly technology-oriented industry now. I mean, you look at the vehicle of today, it’s phenomenal… It’s no longer just a simple car. Our industry is also moving from automotive to mobility because we can supply components for drones, for robots, etc. We are not just limiting ourselves to the automotive industry because mobility is disrupting as a whole.

Back in the day, what happened was that there was a lot of build-to-print. An original equipment manufacturer (OEM) would give me a design, a drawing, and I would make a component. Like with our differential business, I would ship the gear, someone would ship the casting, someone would machine the casting and put the differential together. Today, OEMs tell us to design it. They give us their end requirement… They would essentially say design it how you want so that they get their end output. Therefore, reliance on system suppliers has gone up. That means our real role is to invest in R&D and testing because that is going to be critical for the success of the auto component industry. If we don’t invest in R&D and testing, we will lose business. The industry average of R&D spend is 0.5 per cent in India. In our business, it is between 3.5 to 6 per cent.

Will India’s skills gap be a challenge moving forward?

It’s not just the industry that is disruptive but so is the education space and training skills. It is all changing and with change, talent will also evolve. In this space, I’m not worried about it. You may run out of talent because people become fewer, but then you automate… The fact is that if the entire world automates then the labour cost becomes equal. In turn, it becomes a more competitive landscape. Therefore, you need to build better efficiencies in your processes and products. The fact is that you will always need people, whether you need them for maintenance or you redeploy them in a lot of different areas. So, I’m not going to say that automation comes in and we are going to get rid of people. That is not the case. We are automated and we hire a lot of people.

Is there potential for the auto component industry to benefit from the China-plus-one strategy?

There is a huge advantage of manufacturing in India from a cost advantage perspective and from the supply chain perspective. When companies want to de-risk from China, they will look at India. They are looking at India, especially with electronics manufacturing.

The fact is that the Indian auto component industry has grown 33 per cent in the last year, going from over $50 billion to $70 billion. The growth in itself is significant and it’s illustrative of what we are building.