Thursday, January 17, 2008

The labour cost advantage that India enjoys will not vanish in the medium term

Cost advantages can erode if infrastructure doesn’t deliver

With only hours to go for the grand unveiling of the all-new small car at the auto event in New Delhi, one thing is no longer debated. That a viable ‘people’s car’ will increase the overall penetration of cars, since many people who do not own cars or any vehicle will now be induced to buy one.

“The fallout could be far reaching,” observes Mr Yezdi Nagporewalla, National Industrial Director for KPMG’s Industrial Markets and Auto practice. “Increased congestion in cities could force taxing of vehicles and improvement in public conveyance infrastructure. Manufacturers would look to penetrate deeper into B and C towns and rural markets,” he elaborates, during the course of an e-mail interaction with Business Line.

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