Go on, be a Hero PDF Print E-mail
Friday, 06 January 2012 00:00
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The Prime Minister was obviously right when he said, at the India Science Congress, that India needed to step up its R&D, but no one does R&D in a vacuum—this is best done when it is a business imperative. Nothing demonstrates this better than what’s happening at the recently-divorced Hero MotoCorp—after a 26-year long marriage with the world’s most advanced motorcycle company Honda, on whom Hero relied for all technology and R&D, the company is ready to move on. There was no great unpleasantness in the break-up, Hero has not only improved its sales month-after-month, it has even given up the R&D crutch—it can source technology from Honda till 2014 under the separation agreement—and is showcasing its R&D prowess in the capital’s AutoExpo right now.

The launch of its first product—a new petrol-electric hybrid scooter—without any technological support from Honda goes to prove that the company has worked on its R&D, both in-house and by collaborating with other technology firms abroad. This also shows that Indian firms are not shy of investing in R&D when it comes to sectors where commercial returns are attractive.

Nor is the Hero group the only company in the two-wheeler space to have established itself seamlessly and successfully in the market after a divorce with a foreign partner. Bajaj Auto and TVS Motor who had JVs with Kawasaki and Suzuki respectively have done precisely the same thing Hero is doing. Today Hero, Bajaj and TVS are the top three two-wheeler manufacturers in the country and none has any foreign partnership. This best shows the coming of age of the domestic two-wheeler players who didn’t do any great R&D in the past, not because they couldn’t do it, but because they didn’t need to. That’s an important lesson for those who think India can just up its R&D game at the drop of a hat—unless there is more competition, and from companies who are technologically superior (that means foreigners, by and large), there is no incentive to spend more on R&D. In 1984, when Honda entered into a JV with Hero, the law did not permit foreign companies to set up subsidiaries in India and the lack of knowledge of the market was another reason to seek a partnership—the foreign firm providing the technology and the local one the market expertise was the norm in most such JVs. Today, with the law allowing foreigners to set up shop, Indian firms have risen to the challenge, and no one’s complaining. That’s what being a hero means.

Last Updated ( Wednesday, 02 May 2012 09:04 )

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