Chennai, also called the “Detroit of South Asia”, has many auto majors like Ashok Leyland, Mitsubishi, Ford, Hyundai, Lancer and TAFE located here. Several Tier-I suppliers like TI Metal forming, Sundaram Fasteners, Brakes India, Lucas – TVS, Wheels India, Rane Steering, Rane Engine valves, Rane Brake linings, Sundaram Brakes linings, Rane Madras etc., have strong presence in the city.

As per a report of the eleventh Five Year Plan (2008-2012), the investment in the auto sector in the city of Chennai and its suburbs was expected to be around $15-20 billion. According to the report, Tamil Nadu contributes to around 33% of commercial vehicles, 21% of all passenger cars, and 35% of auto components which are produced in the country. In about 7-8 years, the auto sector in the state is expected to grow a business of around US$15–20 billion, with 500,000 more jobs.

The formation of the automotive cluster in Chennai has many benefits. It would form a skilled labour force and would promote auto suppliers to build a base in or near the cluster. The accessibility of the port facility in Chennai can help companies in exporting their vehicles. And most importantly, with the presence of a number of chief automobile stakeholders in the city, the automotive cluster in the city would get strong government support. The auto cluster can contribute to the overall growth of the industry by increasing the output of the companies in the cluster and by invigorating formation of new business.

According to a report of the Eleventh Five Year Plan (2008-2012), the investment in the auto sector in the city of Chennai and its suburbs is expected to be around $15-20 billion. The report says that Tamil Nadu contributes to around 33% of commercial vehicles, 21% of all passenger cars, and 35% of auto components which are produced in the country. In about 7-8 years, the auto sector in the state is expected to grow a business of around US$15–20 billion, with 500,000 more jobs.

The formation of the automotive cluster in Chennai has many benefits. It would form a skilled labor force and would promote auto suppliers to build a base in or near the cluster. The accessibility of the port facility in Chennai can help companies in exporting their vehicles. And most importantly, with the presence of a number of chief automobile stakeholders in the city, the automotive cluster in the city would get strong government support. The auto cluster can contribute to the overall growth of the industry by increasing the output of the companies in the cluster and by invigorating formation of new business.

Challenges
There are a few issues which restrain India from attaining the status of other global players. Despite being around 60 years old, the domestic auto industry lags behind other countries like South Korea, Brazil and Mexico in terms of production and sales. This makes it difficult for companies to invest extensively in R&D, a key competitive tool in the global market

Countries like China and Thailand might put a spanner in the domestic industry's wheels as they are capable of beating India at its own game, that of low cost. The growing number of FTAs (Free Trade Agreements) that are being signed by India with countries like Thailand, Singapore, China etc is likely to hurt the domestic players as they pay a relatively higher duty of around 25% as compared to 1%-10% being paid by its Asian counterparts. Other reasons include higher tariffs and resistance to IT.

Another major challenge of the cluster is that SMEs do not use ICT tools in their business processes for their manufacturing competitiveness. The OEMs expects a high level of ICT usage by their vendors but it’s a challenge. All major auto parts manufacturing units concentrate on quality manufacturing as per the global standards, but not far as ICT use is concerned.

The enterprises are not clued in on the global business opportunities and how to navigate the export market. The industry also has a low level of research and development initiatives. Most component companies are dependent on the OEMs for technology. The cluster is exposed to cyclical downturns in the automotive industry, and is not well cushioned for these.

Project Vikas Initiatives
Project Vikas has planned a number of initiatives to tackle these challenges. Under the project, sensitisation programs are being conducted to help enterprises understand how the challenges before them can be well addressed through use of ICTs.

Dependence on OEMs for technology as well as business can prove risky. So Project Vikas encourages enterprises to explore export opportunities though a consortium formed of like-minded companies and creates the right platform to make this happen.

Project Vikas is also in the process of setting up an e-Readiness Centre in the cluster. Training programmes for the local independent software vendors are being conducted. Workshops for the CxOs and Directors of enterprises on ICT training are also being conducted. Workforce training programmes are also planned.

To enable business development of the enterprises, Project Vikas has envisaged a Web portal which would enable these businesses to connect with other business, and help them find customers as well.