For quite some time now, the auto sector has served as an excel-lent example of the joys and tribulations of the Indian growth sto-ry. Achieving a 92 % increase in gross turnover between 2006-07 and 2010-11 to touch $ 58.5 bn in March 2011, the domestic auto industry has had to deal with a host of challenges over the past year or more, which has slowed down its heady pace of growth.

However, notwithstanding its present predicament, a robust auto sector is critical to the country getting back on the growth trajectory as the progress of the automotive industry has a direct bearing on the development of infrastructure (one of the major areas of focus in the 12th Plan).

But, as is the case with many other sectors, holding the key to the future growth of the Indian auto sector itself would be the availability of skilled manpower in sufficient numbers – an issue that is increasingly becoming the hottest topic of discussion in the boardrooms of auto majors.

According to a skill gap analysis conducted by management consultancy IMaCS (an arm of rating agency ICRA) on behalf of the National Skill Development Corporation (NSDC), the auto sector may face the prospect of an incremental shortage of 35 mn people by 2022.

Considering that studies by IMaCS and another management consultancy Aon Hewitt on behalf of the NSDC have projected a

combined shortfall of 347 mn people by 2022 in 20 identified high growth sectors and the infrastructure arena, the auto sector, in days to come, may not just need talent but also have to com-pete for it with other industries facing similar manpower-related issues. Already, there are numerous examples of people connect-ed with auto retail crossing over to other forms of retail.

The situation for the auto industry is not being helped by the inadequate skills training capacity prevalent in the country. While 12.8 mn people join the workforce every year, the training capacity is only about 5 mn.

Several automotive companies in the recent past have tried to overcome the people problem by adopting Industrial Training In-stitutes (ITIs) or by partnering with the government to improve the education imparted at these facilities. Some have started their own private training schools or got involved with polytechnics and engineering colleges, so that the curriculum could be tailored to meet the requirements of business.

However, if one were to sum up the impact of all the skill de-velopment efforts currently underway, it has barely scratched the surface. Skilling initiatives have to increase manifold to meet the auto sector’s own requirements. A task of this magnitude can’t be handled by either the government or the private sector work-ing in silos. A coordinated approach involving all stakeholders is

FOCUS ON SKILL DEVELOPMENT IS NEED OF THE HOUR

Dilip Chenoy, CEO & MD of the National Skill Development Corporation (NSDC)

Guest COMMENtary

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the need of the day. A start has already been made with the for-mation of the National Skill Development Coordination Board to coordinate the efforts of all the ministries and agencies connect-ed with skill development.

To encourage greater private sector involvement with the skills cause, the government has also set up the NSDC through the Public Private Partnership route to create, fund and enable private sector initiatives in skills training ventures. [The Society of Indian Automobile Manufacturers (SIAM) is one of the 10 pri-vate sector shareholders of the NSDC]. Last year, S Ramadorai, Vice Chairman of India’s biggest IT software company, TCS, was appointed as a Skills Advisor to the Prime Minister to fast-track the government’s mission of skilling and up-skilling 500 mn peo-ple by 2022.

Over the nearly three years that the NSDC has started fund-ing private sector skill training projects, it has been our constant endeavour to ensure that the training was of a manner and standard that would benefit organisations, including those in the auto sector, hiring students passing out of NSDC Partner institu-tions. In order to do this, we have taken a three-pronged ap-proach. First, try to get a sense of the different types of people re-quired in an industry through sectoral skill gap studies, then find out what the national occupation standards are in different areas, and finally determine the competencies required for various job roles across industries.

In the auto space, for example, OEMs typically generate 25 % of the employment, while manufacturers of parts account for 67 %. The remaining 8 % is accounted for by makers of coaches and bodies. Car/parts dealerships hire a lot of non-engineering graduates and ITI pass-outs.

Three of the leading bodies in the auto arena – Automotive Component Manufacturers Association of India (ACMA), SIAM and Federation of Automobile Dealers Associations (FADA) – have come together to form the Automotive Skills Development Council (ASDC) to determine the standards, which should pre-vail in the auto sector and also handle the assessment and certifi-cation of training. The ASDC is the Sector Skill Council for the automotive arena and has been funded by the NSDC.

The ASDC, which is charged with creating the national occu-pational standards and also setting the competency standards, has successfully embarked on a pilot project and is now taking it to the next level. The European Union (EU), too, has joined hands with the ASDC.

NSDC has also been closely working with people connected with the automotive industry for setting up scalable and sustain-able skill development initiatives to meet the sector’s growing manpower needs. NSDC, moreover, is in dialogue with various international agencies to align our standards and certifications for ensuring mobility of people across borders.

SUSTAINABLE & SKILLED FUTURE

We have spoken to the executive councils of the representative bodies of the auto sector and with automotive companies to con-vince them to do four things to help in propagating the skills eco-system – hire skilled and certified people, pay more to certified people, refund training fees to people after they have completed

a certain minimum period of service, and more importantly, ac-tively participate in the auto sector skill council to determine oc-cupation standards and competency levels.

In September, a pilot project of the Ministry of Human Re-source Development’s National Vocational Education Qualifica-tion Framework (NVEQF) was formally launched in 40 schools in Haryana, as part of which training in the automotive domain would be provided to students of the higher classes. The ASDC is involved with this NVEQF initiative, which would be rolled out in other states shortly.

Increasingly, though, it is becoming clear that the govern-ment is looking at industry to play a leadership role in several ar-eas – whether it is through the setting up of schools, imparting vocational education or establishing ITIs and polytechnics. In-dustry is being expected to take the lead in training and employ-ing people, besides determining the occupational standards, vet-ting of the curriculum, and assessment and certification of the training. This is a huge departure from the past, when industry did not have a very big say in many of these aspects.

Industry presently has a once in a lifetime opportunity. If in-dustry does not deliver, we could go back to the old situation, where everything was dictated by someone else. In the past, manufacturing companies would often say that they did not have enough of an incentive to invest in skill development. The gov-ernment has now addressed this by permitting weighted deduc-tion of 150 % of expenses (not being expenditure in the nature of cost of any land or building) incurred on skill development pro-jects. Training partners of NSDC as well as some designated pri-vate sector skills training providers are now even exempt from service tax. It’s really now up to industry to take it further.

If the auto industry follows the four things that the NSDC has been advising it to do, it would create a sustainable environment for developing and promoting skills. Automotive companies should ask for the same practices to be adopted and followed by their vendor and service partners. If the NSDC’s prescription gets an enthusiastic buy-in from the entire auto ecosystem, it is our belief that the industry would create human talent and not have to fish for it or resort to poaching.

Fishing and poaching only increases the cost for companies. If talent is created or ‘farmed’, empowerment would reach a much higher level. Empowering a larger number of people by equipping them with skill sets that are the need of the hour would enable the auto sector to create more buyers for automo-tive products and thereby create a bigger market for itself. Own-ing a car or two-wheeler ranks among the top aspirations of a lot of people and thus it would be in the auto industry’s own inter-est to help raise the earning capacity of potential buyers through skills training initiatives.

If the auto industry participates in a big way in skill devel-opment initiatives, it would be the most significant contribu-tion that the industry could make to the nation. The basic re-quirements are in place. The need to do this is more than ever and industry now just has to make sustainable skill develop-ment a priority.

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13autotechreview December 2012 Volume 1 | Issue 12