Personality
Aversion to Atmanirbhar?
Look at the ease with which OEMs have flocked to China for procuring hundreds of commonplace products including raw materials like steel, even while starving Indian capacities! Rajiv Bajaj should believe more in Atmanirbhar.
Rajiv Bajaj, Managing Director, Bajaj Auto Ltd, has several traits of his illustrious father, Rahul Bajaj. Apart from continuing with dad’s pioneering work, he has also imbibed the outspoken nature of Rahul Bajaj. In this he is unafraid of swimming against current, unmindful of some of its negative aspects.
I remember Rahul Bajaj in the early 1990s leading the Bombay Club in its virulent opposition to liberalisation. The club painted a hoary picture of the new economic policy damaging the economic edifice built through the permit- licence-quota raj. Of course, Bajajs, like the Ambanis, rapidly adjusted to the new regime and emerged much stronger in the post-liberalisation era.
World’s ‘Hamara Bajaj’
Hamara Bajaj recorded spectacular growth not just within India; its international business did give greater meaning to Bajaj being the world’s favourite Indian. During 2019-20 the company’s export income at Rs 11,845 crore formed 42 per cent of net sales. The company exported its motor cycles and three-wheelers to 79 countries recording spectacular growth in several African, ASEAN and Latin American countries. Its vehicles were ranked No 1 or No 2 in 22 countries. Its total operating income of Rs 29,919 crore was built on sales of 1.87 million motor cycles and a little over 3 lakh commercial vehicles; export income accounted to close to Rs 12,000 crore.
‘Freedom to procure from anywhere’
With this background, we can now understand the criticism by Rajiv Bajaj over the focus of the Modi government on Atmanirbhar Bharat and the restrictions on imports, especially from China. In recent interviews and articles he forcefully argued the case for the freedom to source materials and components from wherever they were most competitively available: “we must continue to trade with China… In supply chain, commitment is important, a sense of mutuality and reciprocity is indispensable,” he said. Rajiv pointed to the government suddenly coming down hard on imports, especially from China, during June-July 2020. He felt it was akin to cutting one’s nose to spite one’s face: “overnight how can one source components that are made in the domestic market when the need was to deliver in time products to domestic or export customers?” he asked. He also held that it is a lot easier to operate in one of the ASEAN countries than in India. He based it on an exhaustive study of India, Vietnam, Indonesia, Thailand and Malaysia on five metrics – land, labour, electricity, logistics and the legal system.
but the Freedom killed many enterprises
Not just Bajaj; we had dozens of other large corporates that have switched to China and elsewhere for procuring components and raw materials that were earlier sourced from India. Suresh Krishna, Chairman, TVS, pointed to a large manufacturer of cars switching to Korean suppliers for fasteners, a product of well-established quality in India for decades. We saw the entire Indian antibiotics/penicillin and calcium carbide industries wiped out by cheaper imports from China.
We had several instances of original equipment manufacturers (OEM) succeeding to nurture and source components at competitive prices from India. V Krishnamurthy did this for Maruti to remarkable success during 1983-87. Ratan Tata did attempt this in a big way in committing the price of Rs 100,000 for Tata Nano and did persuade dozens of vendors to produce and supply to pre-determined, competitive prices. But the Nano experiment did not succeed, thanks to Mamata Banerjee torpedoing the project in Bengal. We had the success of the Renault Kwid starting with 97 per cent indigenous content and offered at an extremely competitive price.
Help nurture local production
With its size and success, Bajaj Auto can do this to even greater effect. Only Rajiv Bajaj should desist from taking the line of least resistance and the easiest way of doing business and believe more in Atmanirbhar. After all OEMs are not averse to increasing their prices. In the post Covid months when the lockdown ended and markets opened up, Bajaj Auto increased prices by over 25 per cent and still reported booming sales. Surely, they have the capacity to pay a little more, if still needed, to vendors in India. –SV
