The National Capital Region (NCR) of India which includes the entire National Capital Territory of Delhi as well as the neighbouring satellite towns of Faridabad and Gurgaon in Haryana; and Noida, Greater Noida and Ghaziabad in Uttar Pradesh; have over a few decades seen a large number of investments taking place in the region as a result of manufacturing facilities being established by a variety of vehicle makers.
In passenger cars Maruti Udyog and in two-wheelers Hero Honda have been the most dominant companies in terms of their large volume production. Their scale of operations have enabled them to draw sizeable investments from downstream industries including automotive ancillaries and companies not wholly dedicated to automotive business.
There are roughly 180 companies in the National Capital Region of India engaged in the manufacture of automotive components – some totally Indian-owned, some joint-ventures between Indian and foreign partners and some that are wholly-owned subsidiaries of foreign transnational companies.
If one were to map the way investments have been moving in other regions of India, it would be very evident that automotive investments in the NCR have somewhat reached the brim. Most preferred destinations are in Maharashtra and Tamil Nadu and lately in the State of Uttarakhand.
The NCR is other words has reached a stagnation point which continues to be coupled with nerve-wracking infrastructure problems -- the biggest being power to run enterprises. As a result, most forward looking and practical enterprises create their own power generation units without taking grid power or utilise both. Those who do not wish to take grid power for the simple reason that it will be absent most of the time, find their project investment costs as well as operating costs shooting up. Generating one’s own power, costs nearly double if not more than what it would if one were to use grid power.
The urbanisation that has taken place in some of the areas which have seen industrialization, such as Gurgaon, are bereft of any proper public transportation system or even good roads! For a senior executive of a company living somewhere in the South of Delhi and having an office in one of the industrial areas in Gurgaon, commuting would take up about three hours of the day as the network of flyovers on the connecting National Highway 8 has been taking over four or more years to get completed. Besides this, there are other choked points on the way to work. Innocuous as this may sound, this small example is indeed a problem for many professionals which favours a decision of working in an automotive enterprise elsewhere than somewhere in the NCR.
Locations that have been recently industrialised and with a large automotive presence as well, have not seen an urbanisation plan develop in tandem which would not only provide decent housing to workers and professionals but basic amenities such as education for children, hospitals and places for recreation. This makes it harder for people to opt to work in companies located in such areas or face terrible commuting problems even if they did agree to work. On the other hand places such as Faridabad are in chaos with industrial and residential areas rubbing shoulder to shoulder.
Though the NCR does have several industrial training institutes and polytechnics from which companies draw their manpower requirements, what many enterprises are facing these days is not necessarily a lack of skilled workers but a situation of having to pay a worker much more to retain him or her. Demand is there due to the large mushrooming of manufacturing companies in the NCR which vie with each other to entice people to move for higher emoluments. As one senior manager put it, to employ an engineer with six to eight years experience, his company now needs to pay a 30 per cent premium compared to what was being paid some years ago. Attrition among youngsters is higher.
Though companies like Maruti Udyog revolutionised the passenger car industry in India as well as the development of the NCR in several ways, the NCR still has many pitfalls which definitely is turning investment away into other locations. The other reason that is perceived is that there is now a dearth of land for further investments in the region.
A distraught CEO of an auto component company says, “Any further investments in NCR should be banned! Even substantial expansion of companies should not be allowed for the simple reason that it is already hell!”
(Published in Autocar Professional Magazine)
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