Made In India

I was quite surprised to read an article in the Times of India that for the first time India’s automobile exports have overtaken those of China. Since January 2009, India’s auto exports grew by 18% amounting to a total of 230,000 cars, vans, SUVs and trucks. Whereas China’s automobile exports were 165,000, a sharp decrease of 60%.

The main reason is that China’s focus is on larger cars, a segment which has taken a severe beating thanks to the ongoing recession, especially a reduced demand from countries like the US. India, on the other hand, has mastered the art of designing and manufacturing small cars. A shining example is the Nano by Tata Motors, priced at just one lakh Indian Rupees (approximately $2500). The Nano is 3 meters long, seats four comfortably (I know, I sat in one and I am 6 feet tall) and conforms to Bharat 3 and Euro 4 norms. There was so much demand for the Nano that the company had an elaborate countrywide lottery to determine who would get the cars in the first batch.

The thing with the Chinese is they are very good at manufacturing just about anything and everything that can be manufactured; and that too at an unbelievably low price. Indians tend to be stronger in the research and development side of things, although low cost manufacturing is something that comes by default by virtue of the fact that we are a third world nation. However, there is a major difference in the way the auto industry works in China and India. India opened up its automobile sector a long time ago and allowed foreign auto manufacturers to have 100% stake in their Indian subsidiaries. On the other hand, the Chinese still force foreign auto makers to set up joint ventures with local companies, thereby splitting their profits. This makes India a better destination. And the fact that Indians offer better R&D only goes to sweeten the deal. Recently Nissan decided to move production of one of its small cars from UK to India. Such news is not rare anymore.

And now with the recession showing signs of receeding, the FIIs (Foreign Institutional Investors) which had pulled out from India when it all started are coming back. India’s main stock index, the Sensex, doubled in the last six months. Indian auto stocks are near 52 week highs. Car sales in August stood at 25% more than that of the same month last year. In the case of two-wheelers the number was 26%. Commercial vehicles were up 18%. Among other things, investors know that the incentives offerred by governments all over the world for fuel-efficient and low emission vehicles is going to only drive up demand for the kind of automobiles coming out from India. Let alone exports, India has a enormous domestic market whose appetite just keeps on increasing. Like I said, Tata had a lottery for the Nano.

What does all this mean for the CAD software industry? I am not sure. But it has to mean something. If not anything else, if CAD software vendors start enforcing license compliance the way they should, they could see some real nice numbers coming out from a country like India and probably China as well.

Some time ago I had an interesting conversation with the distributor of one CAD vendor whose name starts with “A” and end with “k”. I was shocked to learn that the License Compliance strategy started with a reseller visiting a company and begging them to “buy at least one license” of the product that they had been using for all these years. If that worked then they would ask them to “regularize” other installations one by one over an extended period of time. Of course, none of this would be possible without offering hefty discounts and credit terms, let alone free copies here and there. If nothing worked then the License Compliance department would step in and intiate legal proceedings.

This is pathetic. I don’t know about China, but here in India, people and companies have the money. What they lack is the will to spend it on something like software. Resellers here act as if they are the one’s doing something wrong. The distributor I spoke to wanted SYCODE to become a reseller. Needless to way, I turned down the offer. There was no way I was going to play the game by those rules. I have enough trouble selling my software anyways, let alone someone else’s.

There is a word that sums up all the fantastic numbers in the Indian automobile industry I rattled above. Its called prosperity. And it is happening here in India, recession or not. I am definitely not suggesting that lack of money is an excuse to use pirated software. And therefore using pirated software when you do have the money only makes the situation more pathetic.

I find it odd that CAD vendors indulge in stupid legal battles when they could easily use those resources elsewhere to stop people from stealing from under their very noses. Whether it is manufacturing in China or R&D in India or both, none of it happens without CAD software. I think its time for CAD vendors to straighten up and get their act together. If the automobile industry in India is booming, so should CAD software sales. If that does not happen then there is a problem that needs fixing.

My simple point is that the growing number of products with a “Made In India” tag on them should make a difference in the numbers of some companies, one of them being CAD software vendors.