Interview

Amit Kalyani is the Executive Director of Bharat Forge, the Pune-based flagship of the $2.5 billion (revenues) Kalyani Group. A U.S.-trained mechanical engineer, Kalyani has been working with his father, the legendary Baba Kalyani since 1999 at the flagship Bharat Forge, a leading supplier of components to the auto industry and now increasingly, to other sectors. The Kalyanis are now poised to reap the benefits of the Make in India programme. Amit Kalyani spoke to Naazneen Karmali, India Editor of Forbes Asia.

 

India traditionally had a strong manufacturing base but we seem to have squandered the opportunity to build upon it in the past few decades. Why did we lose our manufacturing edge? By comparison, China has leaped light years ahead.

Countries that have a strong manufacturing base are driven by a certain impetus. In Japan, it was the government’s policy of having an export-led economy that produced everything from basic to high-value goods backed by a tight supply chain. In Israel, it was a survival issue, so the country had to innovate. China’s growth was fuelled by strong internal demand and the opportunity to export goods produced with cheap labour. China has whole cities dedicated to manufacturing. Look at where South Korea is today!

In India, unfortunately, the private sector has been looked upon by the government more as benefiting from the system rather than as participating in nation building. We forget that the Tatas and Birlas were nation builders in their time. From the 1970s onwards, we failed to capitalize on those foundations. The new industries that came up subsequently, such as IT, thrived without any government intervention.

 

Is the Make in India initiative a case of too little, too late? China has already over-invested in manufacturing causing a global supply glut.

It’s my belief that the technological changes that are currently taking place in the manufacturing sector gives us at least a five-year window. Let me elaborate: at the Frankfurt Motor Show, the star attractions were Tesla and Google, not Porsche. The philosophy behind transportation is changing and it is increasingly being looked upon as a service that delivers a certain value to individuals. It no longer just about manufacturing cars. What this means is that we can gear up to make the leap to advanced digital manufacturing. We can deploy our engineering skills in a manner that gives us a competitive advantage.

 

Isn’t manufacturing all about scale and isn’t that where we have also fallen behind?

Manufacturing today is looked upon as a ‘service’ and is driven by knowledge. In that context, scale has become history. For example, with 3D printing, small-scale can be just as effective.

 

As a country we tend to specialize in spelling out big visions and grand intentions but we falter in execution. How can Make in India bridge that gap?

In my view, even spelling out the Make in India vision is a big step forward. The government needs to understand that the world is changing fast and, within that, manufacturing is changing too. The internet of things will have a huge impact. That said, while no one is excluded from seizing the Make in India opportunity, manufacturing requires a certain DNA. My father Baba Kalyani is Mr Manufacturing and can even be considered the poster boy for it. His DNA of manufacturing is all-pervasive in Bharat Forge and the rest of our group. Manufacturing success takes discipline, hard work and time. It’s not like building an IT company.

 

Some argue that it should be ‘Make for India’ rather than ‘Make in India’, which implies manufacturing for exports. Do you agree?

That’s true because where in the world can you find the same level of demand? It’s all here in India and this is the time to do it. Our company has been largely overseas driven and we get 70% of our revenue from international markets. But this was because for the longest time the drivers of domestic consumption were just not in place. Certain sectors like the railways and mining are now open for business.

 

A manufacturing revival calls for huge capital investments but most business groups are already financially stretched. Where are the investments for new manufacturing capacity going to come from?

While it is true that several companies are overstretched, we can use our existing assets and sweat them more. Engineering and manpower cost is a big arbitrage opportunity. We can leverage our engineering prowess and combine manufacturing with design skills. Japan and South Korea have done a great job and there is nothing that holds India back.

 

What is the Kalyani Group’s strategy to tap into the Make in India opportunity? You have big plans for the defence sector as well.

We have created a special Make in India cell within our group and are targeting both exports and domestic opportunities where demand exists. For example, we are making components for power plants and railway infrastructure. Defence is a big play for us. India is the fourth largest arms consumer in the world and the second largest arms importer, so it’s a huge opportunity. We are planning to make everything from artillery to land systems, naval systems and aircraft components.

 

What does industry require the government to do to Make in India successful?

The government should create an enabling framework and then get out of the way. When it comes to government tenders, the ‘lowest bid’ mentality has to go as it results in shoddy outcomes and delays. Companies should be pre-qualified on the basis of their ability to execute and deliver not just on the bid amount.