Global players more willing to source from India than earlier: Wheels India MD

Srivats Ram, Wheels India MD

He has a quiet countenance. And, he is a no-nonsense person. As the Managing Director of Wheels India, the over Rs 4,300-crore Chennai-based auto component maker, Srivats Ram, has demonstrated a sense of positivity at all times.

In this interview with Moneycontrol, he says the readiness of global players to source from India, compared to the past, has definitely improved in the last couple of years, following the de-risking strategy adopted by MNCs, he says.

On infra spend, he says the government has been consistent over the last four years, and that the train has left the station and it can’t be stopped now.

Edited excerpts:

You are among the earliest to suggest that the supply-chain de-risking strategy of global companies will present an opportunity for Indian manufacturers. How has this panned out in recent times?

There is definitely a move by MNCs (multinational companies) to de-risk their Chinese dependence, in terms of global sourcing, and India plays a part, especially where Indian companies are already present.

The readiness of global players to source from India, compared to the past, has definitely improved in the last couple of years. It is a relatively new opportunity. US companies have increased their sourcing from Indian manufacturers and are clearly looking at India as an alternative destination.

Indian manufacturers have indeed benefitted. If not for the China-plus-one opportunity, exports from India would have shrunk much more.

The de-risking momentum is just starting to pick up steam. Hopefully, I do think that this strategy of MNCs will play itself out to India’s advantage and Indian companies should be able to gain additional business in the future.

What are the current positives on the domestic market?

The central government’s continued investment in infrastructure is a big positive as it has a multiplier effect in terms of employment opportunities and income generation across a cross-section of industries. The government has been consistent over the last four years or so on the infra spend. I do think that the train has left the station and it can’t be stopped now.

What is your view on the immediate prospects of the commercial vehicle sector?

There could be some improvement in the CV sector this Q4, compared to Q3.

What will be the impact of the slowdown in the US and Europe on Indian exporters?

The slowdown in Europe and the US is likely to have a near-term impact on exports from India. The slowdown in the US is relatively in the early stages. So, it’s unlikely to turn around in the immediate future. The high-interest rate scenario in developed economies will prove to be a deterrent for new investment by companies.

Borderline investments will not go through when interest rates are increasing in economies around the world. On a positive note, however, the interest rate in the US could come down by mid next year and that could bring about a bit of optimism in the international markets.

What would be the impact of the national elections on the domestic market?

Elections bring a tinge of uncertainty for businesses that are looking to make investments for the future. There would be apprehension around the first quarter of next year. Till that bridge is crossed, companies will be cautious. I expect the first half of 2024 to be a bit sober for Indian companies. However, if there is a clear mandate in the elections, the second half of next year could be good for Indian businesses. I do see an infra fillip soon after the elections. A lot of private capex, too, could come in.

Does GenNext look at the manufacturing sector as a lucrative career opportunity? 

There has been a trend in the past of GenNext in India looking at the IT sector for career growth. For a while, the aspiration of Indian grads has been to work in IT companies as opposed to manufacturing firms. Interestingly, we are now seeing those passing out even from top-notch professional colleges looking at the industrial sector for job opportunities. And that’s a positive sign for manufacturing firms.

From where we are now, how do you see the outlook?

After a quiet period around the national election, the country is likely to continue its growth trajectory. While the world is looking at sourcing from India, a slowdown in the global economy, especially in the US and Europe, could limit export growth next year. However, the long-term export prospects for Indian companies remain positive.