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The automotive industry has been facing a major slowdown but that doesn’t deter manufacturers from developing new products. India is a major export hub for small vehicles. Many major manufacturers like Maruti Suzuki, Hyundai, Ford, Tata Motors, etc. export their products from India to other parts of the globe. Now it has been learnt that Ford and Renault are relying on India to develop their new engines with cost-effectiveness being the major reason for this.

Ford has been developing a new range of engines called Dragon. This new range of engines will spawn 1.2-litre and 1.5-litre units and they will be rolled out in the market by 2016-17. Right now, Ford has a production facility at Chennai that has a capacity to produce 3.4 lakh engines annually and out of these 40% are exported to other markets. The automaker is setting up a new plant at Sanand, Gujarat and once this plant is operational, Ford’s annual production capacity will rise up to 6.1 lakh engines annually. The Dragon range of engines will also be manufactured in China, Brazil, Russia and Europe. Ford will use India as a major supplier by exporting 4 lakh units a year.

Renault also has a research unit in Chennai that is developing a new engine called B4D. This is a 986cc unit which will be used for the company’s small vehicle that will come out by 2015-16. Carlos Ghosn, Chief Executive of Renault-Nissan has announced that they will be increasing the total investment in India to $5 billion and most of it would be spent on the Renault Nissan Technology Business Centre. Carlos Ghosn also said that no one can beat Indian engineers when it comes to developing new products within a restricted budget.

The major reason for using India as an export hub is the sheer amount of cost-savings that manufacturers get after investing here. Just for comparison sake, manufacturing in India is up to 30% more effective compared to other developed places like Europe. Also, India is a mass-market for small cars and hence companies can keep costs low by increasing the export capacities in their respective plants. Both Ford India as well as Renault India refused to comment on the matter.

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Source – Economic Times