2007 Volume 62 Issue 1 Pages 1-20
The Delhi metropolitan area, formally known as the National Capital Region (NCR), is the largest automotive industrial agglomeration in India. NCR accounted for 47% of the national passenger vehicle production in 2004 and 52% of the motorized two-wheeler production. These shares were mostly achieved from India-Japan joint ventures and Japanese owned subsidiaries, which means the industrial agglomeration was strongly led by foreign direct investment, especially that of Japan. In this paper, the author aims to clarify the spatial dynamism of the automotive agglomeration in Delhi NCR through an intensive interview survey of Honda's two motorcycle companies -Hero Honda Motors Ltd. (HHML) and Honda Motorcycle & Scooter India Ltd. (HMSI)- and their component suppliers. HHML was founded as a joint venture between the Hero Group, owned by the Munjal family, and Honda in 1984. HMSI is a 100% subsidiary of Honda established in 1999. On the establishment of the company, Honda obtained a 'no objection certificate' from the Munjal family in consideration of HMSFs five-years specialization in the scooter business. In 2004 HMSI entered the motorcycle segment, which was dominated by HHML. HHML also commenced producing scooters as a countermeasure in the same year. Relations between HHML and HMSI in the Indian two-wheeler market thus shifted to a more competitive environment from a neutral one. However, both companies, plus Honda, hold meetings to coordinate new models to avoid head-to-head competition. There-fore, the author describes this competitive but somewhat cooperative situation as a 'controlled rivalry'. At the initial stage, HMSI built up a supplier network that was decoupled from that of HHML at the latter's request. Around 70% of the suppliers of both companies were located in the northern part of India, with the remaining 30% distributed in south and west India. Inside NCR, HHML's suppliers were concentrated in the Gurgaon and Rewari districts, especially along National Highway 8. On the other hand, HMSFs suppliers showed a more dispersed pattern, including Faridabad and Delhi, to avoid HHML's local suppliers. According to the rise of Japanese-related component suppliers, in terms of financing or technology after 2000, the number of vendors that supplied their products to both companies has increased. The surveyed suppliers have tended to increase the number of business partners, but most of their trade still depends on their top customers, namely HHML, HMSI or Maruti Udyog, India's largest car assembler which is also located in Gurgaon. As for the local suppliers, they have deployed multiple factories to meet the huge component demands from their top customers. Their new location, however, is confined to IMT Manesar, one of the largest industrial estates developed by Haryana State, 15km away from Gurgaon City. A number of Japanese suppliers, HMSI, and Maruti Udyog's second plant are also located in this industrial estate. This continuing agglomeration of the automobile and related industries, which attracts further inflow of industries, makes Delhi NCR India's largest 'auto-belt'.
