India as a potential R&D Hub in Global Automotive Market

Prashanth Doreswamy, President & CEO, Continental India in a recent interaction with Asia Business Outlook shares his insights on how integrating advanced technologies into R&D operations presents significant operational challenges for businesses in India and what approaches businesses should take to incorporate and leverage technologies like EVs and autonomous vehicles effectively and more.

Complex regulatory requirements in India slow down business operations in automotive R&D. What steps can businesses take to streamline compliance and enhance operational efficiency?

If we look at the automotive sector, we refer to new trends and associated terms such as automated, connected, electrified, shared, safe, and sustainable mobility. A few years ago, there were major differences in the features built in our vehicles and the regulations of the Western countries or even Southeast Asian nations, particularly regarding safety and emissions. These two factors are critical as they directly impact fatalities and public health. The government has taken proactive and progressive measures to close this gap. For instance, in terms of safety, they mandated the installation of ABS in 100% of vehicle models rolled out in India since 2019. Additionally, ABS was required on two-wheelers with engines of 125 CC and above, marking a substantial step in improving safety. As this initiative evolved, the government set its sights on further advancements, particularly through the introduction of Electronic Stability Control to enhance braking technology.

Now, 90% of the cars manufactured in India have already migrated to electronic stability control from EBS, an enhanced performance feature that assists in overcoming understeers, and oversteers, and improving vehicle stability. A few years ago, airbags were not normally used in cars. Approximately four years ago, we started with one airbag for the driver. Subsequently, this progressed to two airbags, one for the driver and one for the passenger. Today, the norm is for cars to have six airbags, and each vehicle must undergo a certification process called NCAP (New Car Assessment Program).

Along with airbags, many other innovative technologies have been presented, and the government has predominately minimized the gap in terms of safety. Similarly, in terms of emissions, we transitioned from Euro IV to Euro VI directly, making India the only country in the world to do so. Even advanced nations took considerable time moving from Euro IV to V, and then to VI. This rapid transition has driven significant regulatory changes.

Weak intellectual property protections expose businesses to operational risks in automotive R&D. How can businesses safeguard their innovations while maintaining smooth operational processes?

This can range from basic agreements, such as non-disclosure agreements (NDAs) between parties before engaging in any business transaction, to copyright ideas and innovations, as well as trademarking and patenting. These are crucial necessities for business success and viability, as companies invest substantial resources both financial and human into developing intellectual property (IP). Every employee must understand the business-critical nature of IP, whether it concerns our own company or that of others. Building awareness in this area is essential.

In India, one area requiring immediate attention is the significant disparity in IP-related transactions. While we generate only 1.53 billion from IP, we pay 14.35 billion in royalties for the use of foreign IP. This gap marks the need for more IP filings within the country, focusing not just on quantity but on groundbreaking innovations. Furthermore, we should prioritize innovations that can be commercialized rather than merely increasing the number of patents. A high volume of patent applications may result in a significant portion being of low impact. Thus, we need to be mindful of the balance between the quantity of patents and identifying those that can genuinely contribute to business growth in terms of commercial rights and revenue generation. Additionally, it is important to secure international patent rights under the Patent Cooperation Treaty (PCT), which allows the protection of IP across multiple jurisdictions.

Integrating advanced technologies into R&D operations presents significant operational challenges for businesses in India. What approaches can businesses take to effectively incorporate and leverage technologies like EVs and autonomous vehicles?

The maturity of the autonomous automotive market in the last four to five years has seen significant growth driven by safety concerns, as the government worked to close the gap in safety regulations compared to other countries. This trend is now leveling off. For example, today in India, we have ESC, six airbags, and NCAP ratings. Additional sensors have also been integrated into vehicles, aligning us with the most advanced countries. Government regulations largely affect the adoption of EVs, where consumer preferences drive the demand for autonomous features. Therefore, evolving consumer demands and regulations are impacting the adoption of both autonomous features and EVs.

With this continued R&D, India has significant potential to become a global leader in these transformations, including autonomous mobility and electrification. Currently, India is the third-largest automotive market.

Accordingly, one can be confident that ADAS growth in India will be rapid. While it may not yet fully encompass automated and autonomous functions, substantial growth is expected for assisted functions in the upcoming years. This is also one of the reasons behind the government's push toward improved safety. Additionally, with substantial investments in infrastructure and our highways becoming world-class, these features will contribute to making cars even safer. Moreover, there is increasing consumer awareness regarding the assisted functions provided by ADAS, which offer enhanced safety. And, this is one of the major factors responsible for the significant growth.

Technologies across various domains, in ADAS, EV, or connected and sustainable solutions, have immense potential in the coming days for us to enhance our activities within R&D.

Operational costs in India’s automotive R&D sector are rising, impacting profitability and efficiency. How can businesses optimize their operations to manage costs without compromising on innovation and quality?

The automotive industry has always operated within the triad of quality, cost, and delivery. The industry has evolved over the years through continuous improvement and agility. Going forward, leveraging data and technology is essential for enhancing efficiency. For example, we need to utilize technologies such as generative AI and digital twins. Machine learning can significantly reduce the need for physical prototypes and testing. In the context of Advanced Driver Assistance Systems (ADAS), after capturing substantial data, we must teach the camera or radar what this data represents. This includes labeling objects such as trucks, bicycles, and other entities. Previously, this labeling process was monotonous and required considerable manpower. Today, we have automated approximately 70% of this process.

In terms of robotic process automation (RPA), we have implemented automation for paying suppliers and processing invoices. This has replaced the manual efforts previously required. Once an invoice is scanned, the system automatically recognizes the appropriate category and completes the payment process according to banking instructions. By identifying repetitive tasks, we have successfully automated many of these processes, resulting in cost reduction, error minimization, and increased speed.