Japan is seeking to start its operations in India though China had been its favourable destination for decades. But, now as labour cost has gone up in China, Japan is looking for a new destination and it is eyeing India. It considers India to be a valued market and India is now the most preferred destination for auto investors from Japan.

Japanese companies have started to understand the eco-system in India and despite all infrastructural challenges they are willing to make investments in India. Auto SMEs of Japan are taking immense interest to set up factories in India. Entrepreneurs from Japan are looking for plug-in factories on rent basis so as to establish their presence here. Many suppliers of Toyota are also planning to start operations in India. ‘Japan External Trade Organization’, (JETRO), is open to work with Government and agencies to start operations in India.

The establishment of Japanese auto component factories in India shall pave the way for the development of more auto part factories from other countries in India. Tamil Nadu Small Industries Development Corporation (SIDCO) has invited Japanese SMEs and also offered an area in Tamil Nadu for establishing Japanese plug-in units. JETRO is also working to find ready-to-use facilities for Japanese SMEs.

The SME-dominated Indian auto component sector shall invest in European countries and Slovenia is going to transfer engineering technologies to Indian companies. Bilateral trade would increase between the two countries due to opening of this opportunity.

Statistics reveal that India and Slovenia together did trade of 191 million euros starting from January to September 2011. This has been the period of optimism as Slovenia imported goods worth 131 million euros from India and exported 60 million euros goods to India. Now, trading of technology would boost the Indian auto component sector. Slovenia is going to open easy access to European markets for Indian industries.

The iron ore requirement of Rajkot industries is fulfilled by Bellary. More than 80 % of the iron ore is sourced from Karnataka. But after the suspension of mining activities in Bellary, the supply source has come to a standstill.

Two main raw materials for foundry industry are Iron ore and Pig iron. The price of Pig iron has increased by 20 percent recently. Industry players feel that the announcement by automobile players to install manufacturing units in Gujarat seemed to be promising. But now due to shortage of iron ore and price hike of kerosene and chemicals, things are no longer the same anymore.

The foundry industry of Rajkot has suffered and 30 percent of operations have gone down since August. Moreover, the slowdown in automobile sector has further weighed its toll on the industry. Orders have gone down by 20-25 percent.

The bath fittings manufacturing units that previously were not open to modernization are now taking steps to automate operations. Soft intervention programs have generated team work among members of the manufacturing units. Previously, the manufacturers were isolated and so were less competitive. The cluster approach has enabled them to adopt modern technology and improve methods of production. Now the units make use of induction furnaces while previously they were using oil furnaces.

MIA also has a complaint against the Punjab government as land has not yet been allotted for the launch of a design centre and other modern facilities. MIA has been looking for a 2,500 square yard plot, but then the government is yet to finalize allotment. After the MIA gets hand on the land, a design centre, a mini tool room and a training centre can be established.

Vendors who help out tractor manufacturers have said that labor shortages are detrimental for meeting orders. The mushroom growth of private finance companies in recent years has given a jolt to tractor sales. This is coupled with better remuneration for crops in forms of minimum support prices, government concentration on priority sector lending and increasing returns on land transactions. Thus the tractor purchasing power of farmers has been strengthened.

Tractor manufacturers are found to depend on ancillaries for production of components like gearboxes, engines and brakes. Thus what happens is expansion of big players is taking place and it is going to reach out to small entities in this trade.

At Mohali, Mahindra and Mahindra’s Swaraj division is located and it generated 62,000 tractors last year. The company has planned to manufacture 75,000 tractors this year so as to meet the demand. ‘Sonalika Tractors’ is yet another brand of international tractors limited, and it has increased sales from 50,000 to 70,000 tractors. Out of these 10,000-15,000 tractors is for the export market. The other progressive company is ACE (Action Construction Equipment) Tractors that is based near Delhi and is expecting to have sale from 3,500 tractors last year to 6,000 tractors in this year.

Sale of tractors has gone up in recent years as the machine is used for transport of construction material and for broadening the irrigation network in Rajasthan. C. B Goyal, a vendor of tractor industry says that it is difficult to meet deadlines as the orders have gone up and are increasing on an unprecedented scale. Finding skilled manpower, however, continues to remain a problem.

Ancillaries that are located in NCR belt are investing heavily in low cost automation and to improve upon quality. Investment in low cost automation not just improves quality but also work culture in factories. It also reduces the space requirement and costs involved in manpower management.

The loans are subject to necessary approvals and will be sanctioned and disbursed at competitive interest rates. The inventory finance innovation comes on the backdrop of spectacular sales performance by the company that recorded highest ever sales of 2.4-million motor-cycles during the period 2010-2011.

The company aims for greater growth plans in this year too. For this reason, higher inventories at dealer network and secondary network are expected in this fiscal. Higher inventory means more requirement of working capital at dealer level. Bajaj so has finalized this pact with SBI.

The reason for such growth has been the expansion activities undertaken by SMEs manufacturing auto component so as to meet the growing demand of automobiles in the country.

According to Jayant Davar, president of ACMA, the automobile sector recorded 30 % sales growth signaling the growth to surpass 18 % in the current fiscal year. He comments “The adverse impact of the global economic slowdown is now a thing of the past and the auto industry witnessed unprecedented growth in 2009-10. Auto components imports crossed US$8 billion, however, exports remained flat at US$3.8 billion owing to slow recovery in the US and European markets.”

But then there are also constraints faced by small and mid-sized auto component manufacturers. High input costs, poor infrastructure and power shortage are hindrances to the growth momentum. In-spite of such constraints, ACMA is looking forward to US$3 billion investment every year on a continual basis for 10 years.

The Tamil Nadu Association of Cottage and Micro Enterprises (TACT) disclosed that 15 percent of units in Coimbatore are having their own websites. The major industry types that Coimbatore houses are engineering, automotive components, textile machinery and pumps. Industries in Coimbatore have recorded 10 -15 percent increase in job orders from abroad. J. James, president of TACT, says, “What we thought would be a cost-cutting measure — adoption of e-marketing — has yielded more profits.”

K Raja, in December 2009, started a website for his engineering unit in Coimbatore and for the first time secured a job order from a German customer this year. He comments that by building links and creating valuable content help to gain traffic. Then M Saravanakumar, the owner of a Coimbatore-based Auto Engineering Works company, has 40 % orders from overseas customers. He says that, ‘profit margins in the domestic market were a fraction of those on foreign orders’. He recently purchased five new machines worth Rs 26 lakh each for his unit.

E-marketing can help SMEs perform efficiently in the global market. The reason is it gives SMEs global reach, makes lower cost interactive campaigns that brings measurable results and improves upon organizations’ marketing goals.