is struggling to keep pace with a festive surge in two-wheeler demand following GST reductions, even as commodity cost pressures and growing competition for semiconductors from artificial intelligence and emerging industries complicate the supply-chain outlook for Indian manufacturers.
“This is an opportunity that has come after a long time that we are not able to supply enough. It’s a good problem to have,” Vikram Kasbekar, Executive Director, Hero MotoCorp, said on the sidelines of a Confederation of Indian Industry (CII) visonary leadership for manufacturing event in Mumbai on Monday.
Kasbekar said the broader automobile industry was benefiting from GST reductions, with manufacturers gearing up to meet stronger demand. The recovery has created an unusual situation in which automakers must increase supplies while navigating uncertainties in global sourcing and input costs.
Battery costs and semiconductor pressures
Asked about increasing battery and cell prices and their implications for electric vehicle manufacturers, Kasbekar acknowledged commodity cost pressures.
“Definitely, the pressures from the commodity point of view. And this is something that we need to be prepared for because such kind of uncertainties are always there in an industry,” he said.
He did not quantify the impact on Hero MotoCorp’s margins or indicate whether the company would pass higher costs on to consumers.
On semiconductor availability, Kasbekar said companies were adopting different sourcing strategies based on their requirements for microprocessors, controllers and other electronic components.
He identified Taiwan as a leading source of advanced microprocessors and pointed to growing demand from AI-related computing, storage and processing applications.
The changing demand pattern presents another sourcing challenge for automobile manufacturers, although Kasbekar did not directly attribute Hero MotoCorp’s current supply constraints to chip shortages.
Godrej’s supply-chain warning
Jamshyd N. Godrej, Chairman and Managing Director of Godrej Enterprises Group, who was also at the CII event, cautioned against pursuing complete manufacturing self-sufficiency, arguing that India’s industrial competitiveness depended on access to global supply chains.
“Global supply chains are essential,” Godrej said, citing the specialised manufacturing capabilities developed by different countries.
He pointed to India’s machine-tool industry, which continues to depend on overseas suppliers for CNC controls, ultra-precision machinery, laser equipment, and advanced cutting tools despite decades of domestic manufacturing experience.
“Can we make everything? My answer is no,” he said.
Godrej argued that India could strengthen its position as a global supplier of machinery serving small and medium enterprises while continuing to access specialised international technologies.
Building domestic capabilities
Kasbekar, meanwhile, stressed that Indian manufacturers must strengthen their intellectual property and technological capabilities to compete globally.
“As far as R&D goes, we have to design, develop, and innovate our products. And that is where the IP is,” he said.
He added that manufacturers must develop and adapt production technologies to global standards, building on the two-wheeler industry’s progress in innovation and cost competitiveness.
For Hero MotoCorp, the immediate challenge is meeting festive demand amid sourcing and cost uncertainties. For Indian manufacturing, the longer-term test is developing domestic technological capabilities without losing access to the global supply networks essential for competitiveness, Kasbekar said