Time to switch gears and speed up innovation

India's auto industry has arrived on the global stage but has to learn to adapt to go further.With annual sales of over 20 million units, the Indian automobile industry is one of the largest in the world. It is the fourth largest market for cars behind China, US and Japan and trails only China in the global pecking order for two wheelers. It has also been one of the fastest growing automobile markets in the world at a time when there are fewer takers for cars around the world. Many believe India will emerge as the third largest market for cars as early as the turn of this decade.At the centre of this growth is the evolution of India as a global hub for small cars and frugal no-nonsense commuter two wheelers. In the middle of last decade the Indian government decided to incentivize production of small cars in the country by introducing differential rates for taxation based on the size of a car. The logic was simple. Small cars are lighter, cheaper, cause less pollution and are also more fuel efficient. A country that imports 80 per cent of its oil requirement and where consumers have low per capita income wanted exactly that kind of product.This differential rate of taxation that ranged between 24-32 per cent had a singular impact on the way vehicles were produced or bought in the country. Suddenly, everybody wanted to make smaller cheaper cars and India became the laboratory for making low cost frugal small cars for the world. As Renault Nissan chairman Carlos Ghosn says “if we can sell a small car in India, we can sell it anywhere in the world.” By 2015, every third small car sold anywhere in the world was being produced in India.As sales grew, investments poured in. According to the Department of Industrial Policy and Promotion, the sector attracted foreign direct investment to the tune of $ 14.32 billion during April 2000 and December 2015. Besides this, homegrown auto majors like Tata Motors, Mahindra, Hero MotoCorp, Bajaj and TVS have between themselves invested billions of dollars more. However, as it so often happens, the industry has missed the woods for the trees. Never known for its quality or technology credentials, the Indian industry has done little to reform itself.In December 2014, US car major Ford had to recall over 20,000 units of its compact SUV EcoSport to fix the wiring harness related to correct deployment of curtain airbags and to mitigate concerns of fuel and vapour line corrosion. The recall in India came within a month of a similar exercise by Ford in Australia that covered around 3,000 cars. The cars were made at the company's Chennai factory in India and shipped to Australia.In a similar instance, French car maker Renault had also recalled some of its own best selling compact SUV Duster, in UK due to a problem with the quality of paint that resulted in premature corrosion on the door sills, bonnet and other areas. These cars were also made in Renault-Nissan′s joint factory in Chennai. The recall almost coincided with the company′s decision to shift production of Duster for the UK market from India to Romania. The French carmaker denied there was any truth that the recall and the shift in production were related but is no denying that the recall itself, along with that of the EcoSport undermined Prime Mnister Narendra Modi′s pitch to make zero defect products in India.The industry is also culpable of another much graver offence-resisting change. The highly competitive nature of the business and lax policies-in emissions or safety-has made the industry complacent. To the extent there is a feeling it does not wish to graduate at all. This has disastrous consequences in a country where 140,000 people die each year due to road accidents.In January 2014, just when the entire industry was getting ready for its bi-ennial motor show in Delhi, a hitherto unknown UK based independent body GlobalNCAP that conducts crash safety tests on cars across the world released the results of its first lot of tests in India. All the five cars--Tata Nano, Maruti Alto 800, Hyundai i10, Ford Figo and Volkswagen Polo, fared miserably in the crash test and scored a zero. Ten months later, another test was conducted. This time Datsun Go and Maruti Swift could not muster pass marks. Then again in May 2016 five more cars-- Hyundai Eon, Mahindra Scorpio, Maruti Eeco, Renault Kwid and Maruti Celerio-bit the dust.All of them were made in India and it did not matter who made these cars-Japanese, Koreans, Americans, Europeans or Indians-they all scored a zero. When it came to taking customers for a ride, they are all together. The primary fault-not being equipped with life saving devices like airbags and anti-lock brakes, but some of them would not be safe even with them. It is another matter that the same cars sold in other countries have much better quality.It isn't that the industry cannot sober up. After the first round of NCAP crash tests, Volkswagen decided to "proactively" offer airbags as a standard feature across all its cars. Toyota and Ford have followed suit ever since. Others have resisted. A blue print for crash tests in India by the government however, will require all fresh launches to be fitted with dual airbags from October 2017 while new cars of existing brands would have to comply to it from October 2019.A track record of delaying the inevitable means some would leave it to the last day. That is not a desirable showcase of Indian manufacturing to the world.