“Today, India is the third largest car market in the world. I see the Indian car market growing, and we are the only large country which has potential to grow substantially over the coming years. I see India becoming a major exporter of cars and auto components, which are already at over $20 billion. I think in many ways, we will become the developers and providers of technology to a lot of the developing world in the automobile industry,” Bhargava said in an interview.

“The car industry will drive manufacturing growth in India, and I see a big role for the car industry going forward because among all the manufacturing sectors; I believe the automobile industry is ahead of everybody else. It is the only area where all the major global manufacturers have invested in India and I can’t think of another manufacturing sector, where there’s so much of foreign interest and foreign actual investment from all the biggest players of the world,” he said.

However, Bhargava, a former civil servant, cautions that the Indian manufacturing industry is yet to achieve high levels of competitiveness and productivity, and its public enterprises in particular need to boost performance in the sector. These are themes he addresses in his latest book, Impossible to Possible, in which he describes what made Maruti Suzuki, the first and only instance of the government-run public sector undertaking (PSU) forming a joint venture with a foreign company (Suzuki) in India, starting manufacturing in India in a new sector by bringing in and adapting principles of productivity implemented by its Japanese partner.

Maruti Suzuki, India’s largest car manufacturer, aims to produce 4 million cars by 2030, and surpassed the 2-million mark in 2023.

Bhargava, 89, and Osamu Suzuki, 93, have both retained their positions as chairmen of Maruti Suzuki and Suzuki Motor Corp. respectively, even after retiring from executive roles as MD and CEO, in a 40-year long partnership of trust, loyalty and friendship that aided the success of Maruti Suzuki, says Bhargava. Suzuki has held a majority stake in MSIL since the government disinvested in Maruti Udyog Ltd in 2002, and now owns nearly 60% of the company, generating outsized returns on the investment of ₹20 crore Osamu Suzuki made in the company in 1981, ‘staking his reputation’ on a company that was almost ‘guaranteed to fail’, according to Bhargava, because he was one of the few people who believed in the potential of India’s car market. Suzuki also helped Maruti break out of the mould of a traditional PSU and prioritize profitable growth and competitiveness.

“One of the ways in which the public sector performance can improve, and I think there’s no question that public sector performance needs to improve substantially if they are going to contribute to the country’s growth, is by getting strategic partners who will bring in systems which will help the company grow,” Bhargava said.

“One example is in the private sector, the partnership of Kubota and Escorts, where the management of Escorts decided to bring in a Japanese partner in a company which has been family-dominated for decades. This will enable them to grow their business substantially, instead of them having a large piece of a smaller pie,” he explained.

Bhargava cautions Indian industry against a predominantly Western school of management which might be adversely affecting its global competitiveness. “We tend to blindly follow, including in our education institutions, the Western system of management. But which western country today is as productive and as competitive as companies in the East? A failure to look at what is happening in the world in terms of productivity and competitiveness and manufacturing… will ensure we remain like the Western countries in terms of manufacturing, non-competitive”, Bhargava said. A key feature of this Japanese philosophy of management is kaizen, continuous improvement, which can only be achieved when managements work alongside workers in an equal partnership, Bhargava said.

Maruti Suzuki enjoys a cash stockpile of nearly ₹ 50,000 crore, achieves a 2-3% reduction in the cost of their components (not accounting for inflation) every year, because of the ‘hundreds of 1000s of suggestions made by Maruti Suzuki’s workers every year, leading to savings of hundreds of crores every year. And that is what makes the difference between an ordinary or good manufacturing company”, Bhargava said.

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Published: 28 Jan 2024, 09:53 PM IST