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Roadmap to Industry 4.0 in the automotive sector: Role of innovation and automation

The Policy Times in association with USINPAC, PCombinator, Auto Nebula, Wellisen Nutraceuticals and Passion Framework recently held an hour-long webinar about Automotive Startup Industry Interfaces – Challenges and Solutions. The eminent panelists included Vimal Kumar CR, Founder CEO, MD of Vi Innovations Pvt. Ltd, Pravesh Soni GM – Business Development & Executive TA to ‘Managing Director’ Renault Nissan Mitsubishi Alliance, India, Deepak K. Verma, Quality Head (Automotive Sector) with Experience in Indian, Japanese, US and European OEMs, Akram Hoque, founder The Policy Times and Dr. Prakash Sharma, Ambassador of Global Start-up Ecosystem. Here are some of the key highlights of the session.

Understanding the Automotive Startup Industry Interface: The challenges and the opportunities

The Indian automotive sector is the fourth largest auto manufacturer of cars and the seventh largest manufacturer of commercial vehicles as of 2019.  Before COVID-19, it was projected that the Indian automotive industries would touch  251 to 280 billion dollars by 2026. In terms of foreign investments, the Indian automotive sector attracted around 24 to 25 billion dollars during April 2000 to March 2020. It is one of the largest employment creators. It is also one of the highest exporting sectors for the country. Given all of this, we can say that India has significant role to play in the automobile sector. However, it also faces serious challenges it will have to overcome.

Challenges and opportunities amidst a pandemic

Vimal highlights lack of funding, visibility in the market as key areas which need to be looked at.  

Deepak adds, “Domestic (OEMS) are competing with each other, whether it is a two-wheeler or passenger car or a commercial vehicle. At the same time, they are competing with the global companies who are already in India and those who are about to enter the Indian market.  The opportunity here is that we need certain high skill level of small groups in the form of startups, which can work cohesively with these OEM giants to make their product more professional and lucrative to the buyers.”

Dr Prakash elaborates on the role  Passion Framework is playing  to bridge this gap. He shares, “We are focused on entrepreneurship, research and employment. Auto Nebula is an ambitious brainchild of Sanjay Puri, who is based out of Washington in America. In India, we are focusing on startups.  When we look into the automotive startups, we have multiple challenges. Most of the programs in the past used to be software-based. It used to be business to consumer kind of projects. However, in the automotive sector, we have not only the business to consumer, consumer to consumer but we also have business to business concept. Any innovation needs a prototype and after prototype it means commercialisation.”

So, he believes the focus needs to be on looking at things from the startup perspective, funding perspective and from the industry interface perspective. What kind of impediments and challenges exist? Will there be any solution? What kind of government interventions and policy recommendations are needed? All of these factors need to be considered.

Examining how large brands and startups are coping in the pandemic

Deepak believes that the challenges whether it is for a startup in the automotive sector or any other sector is that it has to have effective and long-term investors. He adds, “Startups who are in the mid level or in the advanced level got really affected because OEMs or investors stopped funding them because the future was uncertain. As per my data, 85 per cent of active startups in India got severely affected because of lack of funding due to economic slowdown and COVID, which has aggravated the situation.”

Pravesh agrees and adds, “From the perspective of industry, OEMs themselves are struggling. Revenues have dwindled. There are no sales. The automotive sector was badly hit by the lockdown. However, the sector was also impacted by policy changes like demonetization and migration to BS-VI and a lot of legislations in Europe.  As a result, revenue is down. Companies are restructuring, and looking at how they can reduce fixed costs and operational costs. They are also looking at innovative ways like working from home to reduce costs. So, OEMs have to first re-energize themselves and then they can fuel startups.”

Even as the big firms look for solutions, Vimal believes startups already have them. He adds, “Startups are readymade solutions. OEMs and startups need to collaborate with each other to overcome these challenging times.”

The way forward for startups is…

Pravesh shares, “Right now, we have to live with COVID. Even after a vaccine is made available, it will take at least 18 to 24 months from there on to embark on a process of recovery. If startups can manage costs, and survive at least for a year, it will help. Companies cannot stop looking at innovation and features, and will be selective but will be looking for bright ideas and bright business opportunities that startups can provide.” 

Deepak adds, “Industries have started opening up. Low volume production has also started but lack of manpower has affected them badly. On a positive front, we can see that those consumers who were considering purchasing two-wheelers are now consciously considering it, and the same is also the case with two-wheeler owners who were relatively comfortable with their two wheeler, are considering upgrading to a passenger car. As a result, we have seen in July and August, a trend of sales for two wheelers is healthy. Also, when it comes to the passenger car segment, mid-level and low level cars are selling. This is a good sign. Once the vaccine comes in, it will give people the confidence to move around, and this will further open up the market.

Can startups attract FDI from abroad?

Vimal says, “Companies are interested in investing in startups but we need to give them robust solutions. We need piloting opportunities from OEMs so that startups can get to the market. Startups need quality opportunities from OEMS, who can get readymade solutions from startups. The two need to collaborate and work together to mutually benefit each other. A lot of international incubators are looking for innovative ideas, and that’s good for startups.”

Pravesh feels  it will be challenging for startups to get foreign investments looking at the global economic scenario as companies will be selective about collaborations with startups.

The role of skill and automation in an era of disruption

Deepak shares, “Skill has always been the real asset of  Indian companies or Asian countries. It was further supported by affordable labor costs. There is a willingness and a dedication to go for automation. However, there is a requirement for large investment, which companies may not be interested in putting in at this stage as volume may be limited. Tier 1 and 2 companies will take two or three years to work in this direction.”

Ramesh adds, “Skill and automation have to go together. If the economy has to grow, expansion has to happen. Industry 4.0 is the future. You will have to deploy multiple aspects in terms of machine learning, AI and automation software automation machine. Automations will create different kind of opportunities. Skill and automation can co-exist.  Currently, MSMEs may not have the kind of investment needed for automation, hence, it’s only the big corporates and OEMs who are working with it. It will take time for MSMEs to get on board as well.”

Policy making and implementation

Vimal  believes that innovation is the key to India’s success in the automotive sector.  Pravesh adds that the industry, academia and startups have to work in collaboration and look at innovation, and policies need to be made around it to move ahead successfully. As far as startups go, Deepak believes credibility and source of funding are vital. Hence policies need to be framed factoring this in.

Another area that needs attention is creating awareness about existing policies among stakeholders so that they can mutually benefit from it.

Disclaimer

The Author refers multiple automotive news to interpret and analyze the trends and views are personal.

Autonebula is a connected transportation vehicle accelerator and investment fund that nurtures startups in this realm by mentoring them across business, technology & marketing – Check out Softlanding with Autonebula


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Harsha Sanil : hsanil@autonebula.com