Toyota and Mahindra & Mahindra are planning to make India a sourcing base for components such as engines, transmissions and gearboxes, while Maruti, Hyundai and Ford are aggressively chasing exports, armed with improved back-end processes to achieve cost-competitiveness.

"Competitive cost of manufacturing, combined with the availability of engineering talent and an indigenous machine tool/forging industry are some of the reasons to source from India. Auto majors are joining the club of mission critical, tier-1 auto component manufacturers," says KK Swamy, deputy MD of Toyota Kirloskar.

"In fact, our companies have to follow quality norms that are among the toughest in the world," he says. Jagdish Khattar, MD, Maruti Udyog, says, "It's high time India's manufacturing strength matched international standards."

Three years ago, MUL decided to benchmark against Suzuki's best manufacturing unit in Kosai and set itself a target of improving its productivity by 50% to match international standards.

Maruti has achieved cost competitiveness via aggressive localisation of components with vendor partners and is investing in an R&D centre and test track as part of its Rs 6,000-crore investment plan, Mr Khattar said.
Maruti, which wants to become a lead player in the diesel car market, plans to start making its own common rail direct injection diesel (CRDi) engines (using Fiat technology) from its new plant in Haryana in '06.

Hyundai's exports have grown from 32,000 units last year to 75,000 units, making it one of the largest exporters.

"A high level of competitiveness in domestic manufacturing, absorbing newer technologies and raising productivity and quality has ensured real competitiveness," says BVR Subbu, director, Hyundai Motor India.

The Korean major has built its plant with a total investment of $1bn in Chennai. The plant has the capacity to make 2.5 lakh cars and 3.5 lakh engine transmission units per annum, from where it exports engines and transmissions to its operations in Korea and Turkey.

The Toyota Kirloskar Auto Parts (TKAP) plant will supply manual transmission gearboxes to Toyota Motor's (TMC) worldwide markets. The company will initially produce a transmission system, which goes into a new integrated multi-purpose vehicle (IMV) that TMC is set to roll out in Thailand, Indonesia and Vietnam.

The 100% export-oriented unit (EOU), backed by an investment of Rs 380 crore, can produce 160,000 units annually. Ford India exports around 1,500 units a month, while its domestic sales stand at around 1,900 units a month. Ford has been putting a lot of emphasis on exports of CKDs, sources said.