Thank God, Ratan Tata is an Indian and the Nano is, therefore, an Indian initiative.
Imagine a Chinese Tata rolling out a Nano. The one word we would all have screamed is: dumping! Any number of headlines, editorials and opinion columns would have dismissed the achievement as the usual Chinese propensity to dump their products below cost price on the rest of the world. Wasn’t it as recently as last year when our Auto Component Manufacturers Association announced: “The industry is facing a serious threat from Chinese firms exporting products at very unreal prices—almost 30-40% lower than the Indian prices”? Earlier, our textile industry had the same apprehension, namely, that textiles and apparels (including silk and satin) could be dumped in markets such as India at “throwaway prices” by China. At one time or the other, we have voiced similar fears about motor cycles, pharmaceuticals, chemicals and so on.
The Congress, around four years ago, in its charter listing the National Democratic Alliance coalition government’s “50 failures” mentioned the dumping of Chinese goods (in general) into the Indian market, which has out-priced domestically produced goods to the dismay of indigenous manufacturers as one of the failures on the policy front. In fact, we have also accused the Chinese dumping of seriously impairing our foreign direct investment flows.
I have always wondered how the Chinese government or its industry can afford to dump their products at “unrealistic prices” in foreign markets year after year, or rather decade after decade. And if such “dumping” is viable for them as, say, “entry price strategy”, why cannot the same strategy work for us?
Now, suppose what Tata has done for the automobile industry with a combination of design and process innovation, target costing, production size, commitment and sheer chutzpah, were a way of life with our industrial sector at large and everybody were offering their industry equivalent of the Tata Nanos at 50% of the prevailing world prices, would dumping be a fair accusation? If not, could it be that we need to understand if the Chinese could be doing a Nano in virtually all their manufacturing?
China today is as capitalist an economy as a country can get and its companies cannot afford to dump their products any more than a Ford Motors, a GM or a Toyota can. As I see it, Chinese products are cheaper for many of the same reasons that Tata has managed for his Nano. An average Chinese factory is several times an average Indian factory in size. Besides, an average Chinese product uses lighter and less expensive material, employs better design efforts and uses fewer, more efficient and trained labour. As a consequence, every manufactured Chinese product is a Nano of sorts. Of course, we may need to take heed of China’s serious mistakes for which its products have been much in news of late.
Shifting gears, if Tata—a modest-sized passenger car maker— can produce a world car at Rs1 lakh, or if our telecom industry can make telephony affordable to the lowest strata of society, or if we have had start-ups who dare to dream of laptops costing less than Rs5,000, why can’t a Bajaj Auto, arguably the largest producers of two- and three-wheelers in the world, produce a sub-Rs10,000 scooter or a sub-Rs25,000 motorcycle? Or a sub-Rs40,000 autorickshaw that does not create air and noise pollution disproportionate to its size? Why can’t all autorickshaws be “green”, if their success has been proven in New Delhi? Why can’t a Hero Cycle, with its volumes, make a sub-Rs500 bicycle? Could it be that when we accuse China of dumping all the time, we are slipping into the habit of hiding our own larger inefficiencies?
When Prime Minister Manmohan Singh says, “India has no option but to engage China” he couldn’t be more right. We have a lot more to engage and a lot more to learn from China than from the developed countries. The Chinese have proven themselves the manufacturers of the world. Like us, they are a developing and populous country and our economies have more in common with each other than with the developed world. And countries the size of China or India, and as populous, cannot afford not to be major manufacturers of the world. China has done it. It’s our turn now and Tata has shown how.
Perhaps it is time India and China took our PM’s exhortation to do together what England and France did with Airbus. There is no reason why the two developing giants cannot join hands and expertise to give an Airbus or a Boeing a run for their money.
Can the two countries create a large passenger aircraft at half the price of the Airbus or the Boeing? Can the two come together to research and make drugs at half the world prices? Can the two collaborate on doubling their respective agricultural outputs in five years? Can they do a Nano on housing for the poor? The possibilities are many, varied and exciting. Thank you for showing the way, Tata. Also, let us remember that it is only a China that has large economic stake in India that will be a safe China for us.
V. Raghunathan is CEO of GMR Varalakshmi Foundation. These are his personal views. Comment at email@example.com