Login Area   About us The Government of India, through the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, has formulated an Industrial Infrastructure Upgradation Scheme (IIUS), targeted at improving the global competitiveness of functional clusters in the country through the provision of grant funding for the creation of quality infrastructure. The automotive cluster in Pithampur near Indore is one of the identified clusters under the IIUS. Under the IIUS, the Government of India will provide a grant of up to 75% of the total cost of infrastructure creation and upgradation in the identified clusters, subject to a limit of Rs. 50 cr per cluster. The balance investment requirements would be financed by local (cluster) stakeholders, with cluster industry contribution at a minimum level of 15% of the total project cost. Pithampur Auto Cluster Pithampur is one of the largest Growth Centres in Central India and a well-developed industrial town of Madhya Pradesh. Located 30 kms from the city of Indore, the Growth Centre is spread across an area of nearly 1,900 hectares. With about 122 medium and large-scale industrial units, and more than 455 small-scale industries, Pithampur has attracted cumulative investment of over Rs. 68,250 million and today provides employment to approximately 25,000 people. The automotive industry is one of the most significant constituents of the Growth Centre. India’s automotive industry is concentrated across three major regions – the National Capital Region (NCR), with OEMs such as Maruti, Hero Honda, Honda-SIEL and Yamaha); the Chennai-Hosur-Bangalore region, with OEMs such as Hyundai, Mitsubishi, Toyota, Ford, Ashok Leyland and TVS; and the Pune-Nashik-Aurangabad region, with OEMs such as Tata Motors, Bajaj Auto, Bajaj Tempo, Ford and Kinetic Engineering. The genesis of the automotive industry in Pithampur can be traced to the mid-80s, when Pithampur was envisioned to become the Detroit of India. It was dream that, backed by proactive support from the State Government, saw an excellent start in the establishment of automotive OEMs such as Eicher Motors and Bajaj Tempo. After this initial impetus, however, the focus on cluster growth receded, and the industry witnessed stagnation in new investments. Today, the Pithampur Auto Cluster houses five automotive OEMs (Bajaj Tempo, Eicher Motors, Hindustan Motors, Kinetic Motors, and L&T Case), one major tyre producing unit (Bridgestone ACC) and about 30 auto component and ancillary units. The value of production in the cluster totals approximately Rs. 2,500 cr annually. OEMs in the Pithampur Auto Cluster had a total sales turnover of about Rs. 2,000 cr in 2003-04. Cluster OEMs have embarked on initiatives that, as per targeted sales plans, would increase the cluster’s OEM sales to nearly Rs. 10,000 cr over the next five years. Achievement of these plans will call for significant efforts in cluster development activities. Pithampur has a relatively small auto component industry base, sized at approximately Rs. 500 cr. Of the total, less than 30% (Rs. 150 cr) goes towards meeting the needs of the local OEMs – this represents only about one-eighth (12.5%) of the annual component procurement needs of the OEMs. This compares unfavourably with component procurement patterns prevailing across other auto clusters (where OEMs are found to purchase between 60 – 70% of their components from local suppliers), and underlines the latent potential in Pithampur’s auto component sector. With rapid growth projected in OEM production volumes, this potential can be realised, with appropriate interventions across the areas of infrastructure, regulation and institutional support mechanisms. The Pithampur Growth Centre, which houses the Pithampur Auto Cluster, is spread across a total area of nearly 2,000 hectares, and provides basic industrial infrastructure facilities across areas such as power distribution, water supply, telecom, roads and a dry port. Pithampur has several inherent strengths that provide it with the potential to emerge as a vibrant cluster in India’s automotive industry. However, the cluster has under-performed relative to this potential, largely as a result of low levels of development in its component base and low scale of OEM operations. Today, the cluster is at an inflection point, where OEM-initiated plans for aggressive growth provide a big opportunity for focused development of the cluster. Addressing this opportunity will, however, require several critical interventions to ensure cost / quality competitiveness of the existing component production base, and significant capacity expansion. Overview of Infrastructure Interventions in the Pithampur Auto Cluster The Vision of the Pithampur Auto Cluster is to emerge as India’s most vibrant hub for the production of medium and heavy commercial vehicles, passenger as well as cargo, with a primary focus on the domestic market. Key goals for the cluster include: The achievement of a combined OEM turnover of Rs. 10,000 cr in the year 2009-10. A combined component industry turnover of Rs. 4,500 cr by 2009-10. A well established component supplier base, comprising 40-50 Tier-I suppliers, 200 Tier-II suppliers and 300-400 ancillaries / service providers. Government Policies in the Auto Sector The Government of India’s auto policy seeks to establish a globally competitive Automotive Industry in India and to double its contribution to the economy by 2010. Major policy objectives include: Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country. Promote a globally competitive automotive industry and emerge as a global source for auto components. Establish an international hub for manufacturing small, affordable passenger cars and a key center for manufacturing Tractors and Two-wheelers in the world. Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry. Conduce incessant modernization of the industry and facilitate indigenous design, research and development. Steer India's software industry into automotive technology. Assist development of vehicles propelled by alternate energy sources. Develop domestic safety and environmental standards at par with international standards.