India builds a 'people's car' - with a little help from Japan
India's domestic car market has seen its first major change in nearly 30 years, as the first of the ''Maruti-Suzukis'' begin to roll off the assembly line this year.
The final chapter was thus written in the most controversial automotive - perhaps even industrial - project that India has seen.
It began as a dream of Mrs. Gandhi's late son Sanjay, to develop a ''people's car'' for this nation of 700 million. It then became an obsession, ensnarled in legal dispute, ending spectacularly in scandal and court actions in 1979, after only some 30 uninspired and faulty cars had finally been produced.
Following Sanjay's death in a plane crash in June 1980, the government nationalized the fledgling business, ultimately entering a joint venture scheme - with capital of approximately $269 million - with Suzuki of Japan.
What has rolled off the assembly line at Maruti's long-idle, multi-million dollar factory occupying 300 acres of land is, from bumper to bumper, a small Suzuki. Everything down to the Maruti name-plate and symbol are being shipped in from Japan.
There is thus a certain irony inherent in the way that, after so much controversy and turmoil - charges of privileged government treatment, of unfair reductions in duty and tax, and of land takeovers at unfair compensation - Sanjay's original dream has come to reality. His hopes of a triumph for India's private enterprise of producing a 100 percent Indian car has been transformed into yet another public sector operation which is, in design and technology, 100 percent Japanese.
Yet with the car priced at only $4,750, over 40 percent cheaper than the lumbering models now congesting Indian roads, the Maruti has become an overnight success. Orders are well ahead of production for the next two years.
Four relatively sleek models, painted bright red and white, were unveiled in December. If work goes according to plan, 20,000 cars will be produced in 1984- 85, 40,000 more the following year, and close to 100,000 by 1988-89, by which time 90 percent of the vehicle should be Indian-made.
With disc brakes, front-wheel drive, a modern wedge shape, and gasoline consumption 50 percent lower than Indian models now on the road, it is little wonder that the Maruti has become the talk of the town.
What is remarkable is not that Sanjay Gandhi's car - albeit in a very different form - was ultimately produced under the premiership of his mother, but that Suzuki won the contract, beating French, German, and British firms, in an area which the Europeans have dominated for years. It is also thought to be India's largest, single foreign investment since investment laws were introduced , and that was nearly 10 years ago.
Potential competitors are hopeful that the favored status given Suzuki, including the lifting of price and some import controls, is the harbinger of a more relaxed official policy to bring competition to the field. It could also help to slowly reverse an erstwhile government pledge to achieve near total self-sufficiency for Indian manufacturing.
Suzuki has a 40 percent equity share in the company, the Indian government 51 percent. An earlier proviso, that whomever was awarded the tender would buy back 50 percent of production for export, was finally dropped. Suzuki then entered the ten-year agreement. The factory was inaugurated on what would have been Sanjay Gandhi's 37th birthday.
Named after the Hindu goddess of the winds, the Maruti has begun galvanizing India's somnolent automotive men.
According to industry sources, Hindustan Motors, controlled by the poweful Birla family, and manufacturer of the British-styled Ambassador - the country's most popular car - may be launching a new fuel-efficient model within two-three years. The new car would be produced in collaboration with Inuzu, another Japanese firm.
Bombay's Premier Motors, which produces the outdated Fiat, has reportedly begun talks with foreign firms. And even Standard Motors, the country's third major car manufacturer, whose Triumph-Vitesse ceased production a number of years ago, may be enticed back into the business.
For years, even now, the automobile in India has been seen as a luxury of little relevance even to the growing middle class. They still ride bicycles and scooters, waves of which snarl the center of Delhi during rush hour each day. Many taxis are still the colorful, three-wheeled rickshaw, jostling amongst the bikes.
A combination of Sanjay's legacy and the wind goddess Maruti could now change the face of India's roads.