Unlocking potential: The future of the UK-India automotive trade relationship
Collaboration will be more important than ever, says a motor industry expert as he stresses on the importance of India as a partner for the UK automotive industry.
- Presently, UK-India automotive trade is worth approx. £270 million.
- Over the past decade, the total number of UK-built cars exported to India has increased twelvefold, despite high import duties.
- Collaboration with partners abroad to exchange skills and expertise to accelerate digitalisation offers greater opportunities both for India and the UK.
- India is already a major market for British-built parts, for which future sales are expected to grow by as much as 15 per cent a year to 2022.
The UK automotive industry has a longstanding and mutually beneficial trading relationship with India, rooted in close business collaboration over many decades. Today, our collective automotive trade is worth some £270 million and, as we prepare to enter 2020, the potential to build on this is significant.
India’s automotive sector is already transforming. The need to drive down emissions, increasing focus on electrification and the accelerated growth of more affluent consumers promise a big shift for the industry and also new opportunities to embrace.
UK Automotive faces its own challenges – not least Brexit, which has threatened the success of the industry. We are one of the world’s most highly skilled, innovative and productive sectors. With the right Brexit deal, we can continue to build on our existing trade relationships with India and more than 160 other countries around the world, while working together to meet our shared goals and ambitions.
As a car market, India really understands British brands and has a strong appetite for UK-built vehicles, parts and components. Over the past decade, the total number of UK-built cars exported to India has increased twelvefold, despite high import duties. Likewise, the UK’s automotive sector has benefitted from investment and expertise, attracting skilled workers and businesses from all over the world, including India. Tata Motors’ investment in Jaguar Land Rover and the continued presence in the UK of Indian automotive heavyweights such as Mahindra and Optare reaffirms the importance of growing our trade relationship with India.
Indian plants are in the top 10 for cars imported into the UK, with more than 14,000 Indian-built vehicles registered by British new car buyers in 2018 while Asia as a whole, accounts for 13.5 per cent of the total number of new cars registered in the UK. British-built components continue to be an in-demand commodity for India – the UK exports more than £110 million worth of parts and £100 million worth of engines respectively into India every year.
India and the UK have similar ways of working, approaching projects with creativity, ingenuity and innovation. This is why a number of Indian companies including Tata Motors base research centres in the UK, and why there are many UK manufacturers such as GKN Automotive with facilities in India. Indeed, mixing British talent with the best from around the world has been crucial to UK Automotive’s success, with a vitally important workforce of non-UK nationals contributing skills across every discipline, from artisan craftsmanship to high-tech design and engineering and, increasingly, software development and automated driving technologies – critical as we shape the future of global mobility.
New technology is also transforming our factories and offices. The rollout of intelligent robotics, 3D printing and artificial intelligence, combined with new approaches to data management, is helping manufacturers save time, boost productivity, reduce waste and cost, and respond more effectively to consumer demand.
The estimated benefit of digitalisation to automotive manufacturing in the UK alone is some £6.9 billion – and collaboration with partners abroad to exchange skills and expertise to accelerate digitalisation offers even greater opportunities both for India and the UK. With India’s middle class set to quadruple over the next decade, such developments are essential to meet expected demand.
Another opportunity for collaboration and growth is in the aftermarket. The UK’s aftermarket industry generates more than £21 billion in revenues, but that is still a fraction of what the British components industry could gain globally, particularly in markets such as China, India and the Middle East, where customers are very receptive to high-quality, well-known British brands. As a country with a prevalent culture of repairing rather than replacing vehicles, India is already a major market for British-built parts, but for which future sales, according to recent Frost & Sullivan research for SMMT, are expected to grow by as much as 15 per cent a year to 2022 – or about five times as quickly as the domestic UK aftermarket.
To help foster an even greater trading relationship, SMMT is a regular visitor to India, helping forge new business relationships, build connections and exchange insight and technological expertise. Earlier this year, our delegation to the Symposium on International Automotive Technology in Pune facilitated new India-UK business worth some £2.75 million and SMMT will be returning for the Auto Expo Components Show in New Delhi in February 2020.
As both our industries strive to embrace new technologies and evolve to meet the demand for more efficient, cleaner and safer vehicles in an intensely globally competitive environment, collaboration and partnership will be more important than ever.
Mike Hawes is Chief Executive of the Society of Motor Manufacturers and Traders in the UK.