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CHAPTER –I V DEVELOPMENT OF JAWAHAR AUTONAGAR,

VIJAYAWADA

4.1 Introduction

This chapter focuses on the following objectives: (i) to examine various aspects of the

working of an automobile servicing industrial park, referred to as Jawahar Autonagar in

Vijayawada, and JRD Tata Industrial Park, Kanuru which is an extension of Jawahar

Autonagar; (ii) to assess the status of the automobile cluster in Vijayawada, and identify the

critical gaps in its functioning; and (iii) to review the progress of the auto cluster

development project being implemented by the Special Purpose Vehicle (SPV), known as

Vijayawada Auto Cluster Development Company.

This chapter traces the development of autonagars in Andhra Pradesh, and

presents a detailed account of the progress and stages of development of Jawahar Autonagar

at Vijayawada, and its extension at Kanuru, in an adjacent location. Jawahar Autonagar is the

first and oldest Autonagar in the State. Special features of Indian auto components industry

are highlighted to pinpoint the bright scope for marketing of automobile components, and the

growing need of automobile servicing enterprises. Andhra Pradesh Industrial Infrastructure

Corporation (APIIC) functioning from 1973 is the main institution in the State for developing

industrial estates, industrial areas, and autonagars. Initially, Industries and Commerce

Department of Government of Andhra Pradesh took the initiative in promoting infrastructure

facilities in different parts of the State, and handed them over to APIIC in 1974. Since then,

APIIC has taken the programme forward by leaps and bounds. All these estates and areas are

now rechristened as industrial parks. At Jawahar Autonagar, Vijayawada, Industrial Area

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Local Authority (IALA) has been formed for managing the facilities. This is also known as

Industrial Area Service Society (IASS). Vijayawada Auto Cluster Development Company

Ltd. (VACDCL) was formed as a Special Purpose Vehicle (SPV) for implementing the

Cluster Development Project sanctioned by the Union Ministry of MSME in 2005. The

project plans to provide various support services needed for technological upgradation of the

auto cluster industry covering servicing activities and manufacture of auto components in

particular, and to improve the competitiveness of the industry in the domestic and

international markets. The chapter presents the status of the auto cluster profile at Vijayawada

from 2003, when the Cluster Development project was planned, and presents the details of

various components of the project being implemented by VACDCL at present. The status of

project implementation and directions for the future are also indicated. The project benefits

the entire auto service and auto components industry in and around Vijayawada, and the

facilities created can also be availed by industrial units in the neighbouring districts. The

Automobile Technicians Association (ATA) is the mother association for the entire estate,

with 24 affiliated associations. Activities of leading associations covered in the chapter are of

ATA and the JRD Tata Industrial Estate Association at Kanuru. The Cluster Development

Project activities cover these two locations and the industrial estate promoted prior to

Autonagar in the adjacent location. Another prominent association covered is APIIC -

Industrial Area Local Authority (APIIC - IALA) / The Vijayawada Notified Municipal

Corporation Industrial Area Service Society (VNMCIASS) in Jawahar Autonagar.

4.2 Autonagars in Andhra Pradesh1

Among autonagars promoted in Andhra Pradesh by the Andhra Pradesh Industrial

Infrastructure Corporation (APIIC), Vijayawada is the most prominent one, as it is the oldest,

and has developed with a wide variety of services for servicing heavy vehicles. Jawahar

1 APIIC

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Autonagar at Vijayawada promoted in mid-1960s at Patamata occupies an area of 276 acres,

adjacent to an industrial estate promoted earlier on 54 acres. Later, new Autonagar was

promoted in mid-1990s at Kanuru as an extension of the earlier autonagar. It is on an area of

116 acres, likely to be extended to 150 acres. The two autonagars together account for 392

acres or nearly 400 acres. In Krishna district, two other locations where autonagars have been

promoted are Machilipatnam (42 acres), and Jaggayyapet (45 acres). For autonagars, Krishna

district, thus, accounts for 479 acres at present. In Guntur district, there are autonagars in

three locations – Guntur (243 acres), Mangalagiri (144 acres), and Tenali (55 acres), together

accounting for 442 acres. At Vanasthalipuram, on the outskirts of Hyderabad, autonagar was

developed in 1980s on an area of 221 acres. The type of activities carried out at

Vanasthalipuram goes beyond those normally carried out in autonagars, including automobile

servicing as pursued at Vijayawada. One important activity in Vanasthalipuram is

transhipment of goods from lorries coming from the Northern part of the country to send

goods through another transport company to various destinations in South India. Similarly

goods from Southern centres to be sent to Northern States are transhipped at the

Vanasthalipuram autonagar. Automobile component manufacturing units are also located in

the estate. In all, there are 20 autonagars functioning in 10 districts of Andhra Pradesh,

accounting for a total area of nearly 1700 acres. Apart from Vanasthalipuram, near

Hyderabad, four other locations of autonagars in Telangana region are: Nizamabad (24

acres), and Bodhan (41 acres) in Nizamabad district, Warangal (19 acres), and Karimnagar

(18 acres). The four districts with five locations together account for 323 acres. In Coastal

Andhra, apart from Krishna and Guntur districts, three other districts and locations where

autonagars are functioning are as follows: East Godavari district (2 locations) – Rajahmundry

(97 acres), and Sarpavaram (52 acres), Nellore (91 acres), and two locations in Prakasam

district – Ongole (41 acres), and Chirala (45 acres). Coastal Andhra has 1247 acres covered

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by 12 autonagars in five districts. In Rayalaseema region, Chittoor district has three locations

where autonagars are functioning on an area of 97 acres: Chittoor (24 acres), Tirupati (28

acres), and Madanapally (45 acres).

Basic service activity carried out in an autonagar is servicing of a variety of heavy

vehicles, beginning from lorries. Buses, Vans, tractors, and certain machinery used for road

construction, and building construction largely by municipal corporations, municipalities, and

others also come to autonagar for periodic servicing. Automobile components manufacture is

undertaken in a few locations. Machinery used for agricultural and mining operations are also

visiting autonagar for necessary servicing, particularly in Vijayawada. Trading in spare parts

used for a variety of heavy vehicles is also an important activity, apart from dismantling of

heavy vehicles regularly for different purposes. Depending on the type of demand from

nearby areas, each autonagar has developed certain services needed more frequently, and

certain specialised services for which demand may be limited.

4.3 Indian Auto Components Industry – Special Features2

The advantages enjoyed by Indian auto components industry are reflected in the

availability of the following features in different parts of the country. Krishna, Guntur and

Hyderabad districts, and their neighbouring areas in Andhra Pradesh have distinct advantages

in this direction to improve their manufacturing base to cater to the component needs of

automobile manufacturing multinationals in various countries.

• Highly skilled and educated workforce, and primarily English speaking managers

• Quality conscious managers

• Low cost manufacturing base

• Partnering linkages with global supply chain

• Reasonable price and high quality

2 Project Report on Auto Service Cluster in Vijayawada submitted by VACDCL to the Union Minstry

of MSME (2006).

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• Indian component manufacturers are quite conversant with most global

automotive standards.

• Special strength in the field of commercial vehicles, two wheelers, tractors

& their components

• Most of the raw materials are locally produced and distributed in different regions.

• Implementing Technology Development Projects in association with United

Nations Industrial Development Organization (UNIDO)

• Most vehicles have greater than 70% locally produced components.

• The largest number of ISO/QS certified companies

• Multinationals such as DLPHI and VISTEON, and CUMMINS have started

exporting components made in India to their various other plants around the

world - investing further to make India as a manufacturing base.

• CUMMINS, USA is already sourcing engine parts from India for its global operations.

• More than 70% of the parts used in vehicles produced by leading automobile

manufacturing enterprises which have commenced production in India in recent years are

locally produced.

• Mercedes Benz has set up 7 component joint ventures in India for global

sourcing of parts.

• Ford exports CKDs / SKDs of Ikon from India with more than 80% local content.

• Fiat plans to source US $ 200 million worth of components annually from India.

Auto majors across the world would like to outsource a number of components

considering the increasing production costs in developed countries. Tier II and Tier III auto

component vendors’ base can be developed in the country taking advantage of the global

scenario.

4.4 Development of Jawahar Autonagar, Vijayawada3

Jawahar Autonagar at Vijayawada was developed from 1967. It is the oldest industrial

estate in the State, and perhaps the first in the country to be developed exclusively for the

automobile servicing trade. Foundation stone was laid by Smt. Indira Gandhi, the then Prime

Minister of India, and inauguration of the estate was done by Morarji Desai, the then Prime

Minister of India. Reserve Bank of India agreed to the request of the industries association of

3 Discussions at APIIC, local associations and leading entrepreneurs.

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Jawahar Autonagar to support automobile servicing units of all categories through credit

facilities from banks. Most of the servicing units functioning in Vijayawada town were

forcibly shifted to autonagar during 1967 to 1975 due to pressure from the municipal

authorities, Police Department, and the Andhra Pradesh State Road Transport Corporation

(APSRTC).

Land for the autonagar was acquired in 1963, adjacent to the industrial estate planned

earlier. Construction of the first batch of sheds was completed by the end of 1964. There was a

time lag of three years between the establishment of the estate, and the commencement of

production of the first unit in autonagar. Autonagar is an agglomeration of service activities

designed to serve the automobile industry. Important trades in automobile service industry

located in the estate are mechanic workshops, engineering workshops, fuel injection pump

servicing, painting, carpentry, blacksmithy, tinkering, upholstry, electrical works, body

building works, tyre retreading and vulcanizing, radiators servicing, clutch and break

servicing, etc. Initially, majority of the units in autonagar were shifted from the congested parts

of the town. In later years, a number of new units were established in autonagar. On an area of

276 acres, adjacent to an industrial estate of 54 acres promoted earlier, net usable area for

manufacturing / servicing is 159 acres, and 117 acres is set apart for common services and

facilities. These include roads, common facility centre, open spaces, banks, and other

organisations. The area under phases I & II is occupied by automobile servicing units; and area

under phase III is earmarked for manufacturing units. With the increasing demand for space

over a period of time, land earmarked under green belt has been utilised for the construction of

factory sheds. Automobile Technicians Association has built its auditorium and office complex

on a 1000 square yards plot. Electrical installations for distribution of power have come up on

a portion of the open area. Similarly telephone and postal departments, and banks have been

given plots for their buildings.

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The growth of Autonagar was planned in three phases. Phase I area is divided into 13

blocks, and phase II into 12 blocks of rectangular shape with 675 and 371 plots of different

sizes, respectively. Phase III area is divided into 101 plots of various sizes. The total number of

allottees in phases I & II is 652, and allotted plots are 1019 (excluding common facility plots).

The plots are of four sizes, and consist of an area of 500 square yards, 375 square yards, 250

square yards, and 125 square yards each. The first type is allotted to all trades except spare

parts dealers. The two smaller sizes of plots are allotted to spare parts dealers. Each allottee

was given a maximum of four plots. Big plots of 375 sq. yards at cross roads in different

blocks were allotted for common facilities such as hotels, mechanic sheds, servicing units, and

mulgis are three categories found in autonagar. Mulgis are given on rent or on ownership basis

to old and new spare parts dealers. Many service providers come to mechanic sheds. These

include wood work, painting, electrical work, and other services needed by a vehicle.

Dismantling of heavy vehicles to identify the work to be carried out on the vehicle is a regular

feature of some units.

After the development of autonagar was completed, maintenance of various common

services was handled by APIIC for many years. In 1995, the management of the existing

services was handed over to the Estate Association. APIIC functions as the local authority

and the industrial area service society of autonagar manage the facilities instead of

Vijayawada Municipal Corporation.

The Service Society collects taxes from industrial units annually, and pays 30 per cent

of revenue realised to the Vijayawada Municipal Corporation as part of its social

responsibility. The balance amount is utilised by the industrial area service society (IASS)

also known as Industrial Area Local Authority (IALA) which maintains the services in the

autonagar by getting the works done by the concerned governmental organisations or through

contractors. Expenditure is incurred by the Services Society. Revenue realisation through tax

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collection from industrial units is expected to be better compared to the APIIC or Municipal

Corporation undertaking the responsibility.

In Jawahar Autonagar, in the initial stages from 1967 to 1975, plots were allotted to

all entrepreneurs who expressed willingness to set-up a new unit or shift their existing

enterprises to autonagar. This was done primarily to speed up development and occupation of

plots within a short period. In those days as demand for plots was low, all those who came

forward to occupy a plot, even if they were not clear of the trade they intend to take up, plots

were allotted. Entrepreneurs who were forward-looking and socially aware of the advantages

of autonagar development could quickly take advantage of the allotment of plots. After a

number of servicing units shifted from the city, autonagar became a much sought after area,

and the demand for plots increased manifold. Growth of transport industry in the Coastal part

of Andhra Pradesh gave a fillip to the demand for plots in autonagar. Plots were sold on out

right sale basis by the Industries Department of Government of Andhra Pradesh. With the

formation of Andhra Pradesh Industrial Infrastructure Corporation (APIIC) in 1973, Jawahar

Autonagar development was subsequently transferred to APIIC, with the zonal office of the

Corporation, and office of District Industries Centre (DIC) located in autonagar itself.

Autonagar was conceived as a project of self help to auto technicians, who in turn

could plan for the availability of other services needed for servicing heavy vehicles, and

provide for congenial work space for all categories of enterprises relevant for automobile

servicing activity. Over the years, some allottees let out a part of the plot for other enterprises

on rental basis. Some of the plots were allotted for sales shops for spare parts & engine oil or

lathe machine workshop, etc. In the field study, the principal activity for each plot has been

taken into account, and the enterprises are analysed based on their occupational status. Those

functioning in rented premises are categorised separately. Some trades are not covered by the

definition of principal activity / trade in the plot. Though the nature of the trade is the same as

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that of the principal trade, in their respective plots, they are subsidiary activities operating

from rented premises. Most of the hotels have been set up in thatched sheds erected

temporarily. It is significant to notice that some locations planned as hotels, have been given

to servicing enterprises, and hotels have also come up in locations where they were not

planned earlier. Miscellaneous category includes enterprises such as washing of trucks, sales

shops for front view mirrors, and other materials for show work of the vehicles and godowns

for transport companies, etc. The remaining activities are engineering workshops, spare parts,

tyre retreading and vulcanising, electricians, blacksmiths and tinkers, fuel injection pump

servicing, mechanic sheds, painters, etc. The new type of activities observed are as follows:

oil shops, scrap iron go-down, radiator cleaning workshops, sales shops, and engine cleaning

workshops.

4.5 The Automobile Technicians Association (APA), Jawahar Autonagar, Vijayawada4 The Automobile Technicians Association (ATA) is the lead promoter of the Special

Purpose Vehicle (SPV), The Vijayawada Auto Cluster Development Company Ltd.

(VACDCL) incorporated under section 3 of Companies Act 1956 for the purpose of

implementing the Cluster Development Project. ATA is a federation of 24 affiliated

associations engaged in a wide variety of activities relating to automobile servicing, and other

small and medium enterprises in and around Vijayawada.

The 16 main associations which have contributed to the share capital of VACDCL

directly associated with the automobile trade are as follows:

The Automobile Mechanics Association, The Reboring Workshops Association, The

Automobile Engineering Workshops Association (for body building of heavy vehicles), The

Fuel Injection Pump Calibrators Association, The Autonagar Blacksmiths Association, The

Motor Tinker, Gas Welders and Workers Association, The Motor Carpenters Association,

4 Associations and field investigation

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The Auto Electrical Association, The Autonagar Painters Association, The Vijayawada Tyre

Retreaders and Vulcanisers Association, Disposable Motor Merchants Association, The

Autonagar Old Iron Dealers Association, The Autonagar Iron and Hardware Merchants

Association, The Autonagar Clutch / Brake Systems Association, The Autonagar Radiator

Workers Association, and The Industrial Area Local Authority (IALA)5 (The Vijayawada

Notified Municipal Corporation Industrial Area Service Society).

The ATA constructed its own office building and Auditorium, is successfully

operating a number of development programmes, and providing a wide variety of services to

the industrial community under its purview. The Association founded in 1966, focuses on the

following aspects.

• to promote pollution free technological up-gradation in the automobile

industry

• to promote certification for skilled technicians through a few leading education

institutions

• to facilitate free training campaigns

• to provide training at ATA hall in collaboration with ‘Eicher Motors’ to develop skills

among technicians

• to create awareness on usage of new heavy brake system and welding

• to create awareness on Tata Motors recently released battery working on zero

degrees to the technicians

• proposes to set up Industrial Training Institute (ITI) for the automobile trade

• developed a library with publications in local language, and proposes ambulance

service and a five bedded hospital. In the library, manuals have been received from

companies like Ashok Leyland Ltd., Chennai.

• Proposes to introduce certificate courses to workers and entrepreneurs, in

collaboration with IGNOU (Indira Gandhi National Open University), New

Delhi.

• has been conducting full fledged health check ups and medical camps at

various places

5 Annual Report of IALA, Vijayawada 2010-11 (2011).

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• organising lectures by experts on the latest trends on topics of current day interest

to the industry.

ATA has promoted Industrial Area Local Authority (IALA) for self governance and

undertaking repairs and maintenance of facilities developed in Autonagar. Autonagar is

detached from the Vijayawada Municipal Corporation (VMC) under whose jurisdiction it

falls for governance, and maintains facilities available in Autonagar by collecting taxes from

the member enterprises. IALA has been developed as a model local authority to look after the

interests of the entire industrial community of the area. IALA regularly pays 30 per cent of its

revenue to the VMC as a commitment of its social responsibility. This local authority pattern

under the umbrella of Andhra Pradesh Industrial Infrastructure Corporation (APIIC)

introduced around 1995 has been successfully operating in a number of industrial areas /

industrial parks in Andhra Pradesh. Through the Special Purpose Vehicle (SPV) created for

the implementation of Cluster Development Project, a number of new facilities of far

reaching significance have been created for the benefit of the industrial community, to

upgrade the competitiveness of enterprises through the availability of modern research and

development, testing and certification facilities. ATA has also promoted the extension area of

Jawahar Autonagar at Kanuru on an area of 116 acres, which is likely to go up to 150 acres.

Among the major achievements of ATA in recent years, the following are cited to

indicate its involvement in a number of areas for improving the industrial climate in the

region.

• conversion of damaged roads into cement concrete roads

• contribution towards street light facility

• improvement of drainage system in Autonagar at Patamata and Kanuru

• implementing the sanitation program in autonagar area with 60 labourers

under ‘joint voluntary sanitation scheme’ with assistance from VMC

• protected drinking water supply at major centers with the assistance of donors

• subsidised medical assistance in association with reputed hospitals of

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Vijayawada

• tree plantation drive in autonagar as part of clean and green movement

• implemented cooperative housing scheme for the members to construct a

housing complex on 4.5 acres of land

• ATA has been encouraging export oriented units in autonagar extension at Kanuru.

The following units are involved in export at present: Vilan Industries, Laila Group of

Industries, Bosch Group of Industries, fabrication body building and glass industries.

4.6 JRD Tata Industrial Park Association/Industrial Park, Kanuru, Vijayawada, JRD IALA – JRD Tata Industrial Area Local Authority / Industrial Area Service Society, Kanuru, Vijayawada6 JRD Tata Industrial Estate / Industrial Park has been developed at Kanuru, near

Vijayawada, around 1995 as New Autonagar, an extension of Jawahar Autonagar of Patamata

in Vijayawada. It covers an area of 116 acres at present, and is planned to go up to 150 acres.

Net usable area for manufacturing purpose in the estate is 83.2 acres, and the area covered by

common services such as roads, common facilities, and open spaces total 32.7 acres. On 746

plots developed in the estate, 375 units are functioning at present, with employment potential

of 2,000. Focus of the Kanuru estate is on the following lines. The Association was founded

in 1995: (i) to promote export oriented and sun rise industries availing advanced

technologies, (ii) to implement lean manufacturing technologies, and attract young first

generation technocrat entrepreneurs to produce high quality products, using cost reduction

techniques. The Association has formed JRD IALA – Industrial Area Local Authority /

Industrial Area Service Society covering the enterprises located in the estate for the

maintenance of basic facilities of the estate such as roads, power, street lighting, drainage,

sewage disposal, sanitation, etc. For strengthening the basic common facilities such as roads,

drainage, water supply, and effluent treatment, Kanuru estate is linked with Jawahar

Autonagar as part of the Auto Cluster Development Project implemented by the Special

6 Association and IALA, Kanuru.

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Purpose Vehicle (SPV), Vijayawada Auto Cluster Development Company Ltd. (VACDCL).

The common facility centre, common critical machinery centre, common testing centre, trade

centre, common effluent treatment plant, water supply distribution system, storm water

drains, roads – cc pavements planned by VACDCL also cover the requirements of the

Kanuru estate through the cluster approach; The estate promotes adoption of advanced

technologies for auto components and servicing of vehicles, appropriate technology transfer,

information sharing, and quality improvement. Promotion of ancillary units for automobiles

is another objective. Product design and development through focussed support and in

association with R&D institutions is another direction of the units promoted in the area.

Foreign collaboration is also planned for some of the units. Raw material bank and design

centre with R&D facilities are also planned in the estate.

The Association has conducted training programmes and seminars on topics of

relevance to the automobile industry, and modern management techniques for improving the

performance of units. Awareness programmes have also been organised on topical themes.

The Association takes up matters with governmental organisations on issues that affect the

industry.

4.7 APIIC–Industrial Area Local Authority (APIIC-IALA) / The Vijayawada Notified Municipal Corporation Industrial Area Service Society (VNMCIASS), Jawahar Autonagar, Vijayawada In each industrial estate / industrial development area / autonagar / industrial park,

associations have been formed for specific categories such as trade or activity

associations, and function–wise associations, with distinct role for each of them.

Generally there is an industrial estate manufacturers association or industries association

or small industries association covering the entire industrial park. In addition, other

associations are also formed for specific groups of enterprises. The roles of various

associations are often complementary. The associations work in close consultation with

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each other. They also organise activities jointly. In Patamata, Vijayawada, industrial

estate was developed in early 1960s on an area of 54 acres. Net usable area is 33 acres.

Jawahar Autonagar was developed later in mid-1960s on an area of 276 acres, adjoining the

industrial estate which was already in operation by then. In autonagar, the net usable area is 159

acres. The area used for common services such as roads, common facilities, and open spaces

amounts to 22 acres in the industrial estate, and 117 acres in Autonagar. Over a period, in view

of the increasing demand for factory accommodation, a part of the open area and the space set

apart for common services has encroached upon by industrial units, with the permission of the

concerned authorities. Total number of plots developed is 57 in the industrial estate, and 1174 in

Autonagar. Nearly 80,000 persons are employed in 3,080 micro and small enterprises

functioning in the industrial park and autonagar. New Autonagar at Kanuru was developed from

the year 2000 as an extension of Jawahar Autonagar on an area of 116 acres, which is likely to

be increased to 150 acres. In the present area of 116 acres, net usable area is 83.2 acres, and area

under common services and open spaces is 32.7 acres. In 746 plots, 375 units are functioning,

providing employment for 2,000 persons at Kanuru Autonagar.

After the development of autonagar was completed, maintenance of various common

services was handled by APIIC for many years. The management of the existing services was

handed over to the Estate Association in different parts of the State in a phased manner from

1995. APIIC operates as the local authority. It is known as APIIC – Industrial Area Local

Authority (APIIC-IALA) in the respective locations. Through an enactment of the state

legislature in Andhra Pradesh, APIIC was given the local authority status in municipal areas

and in gram panchayaths. In each location, notified industrial area service society is formed

to undertake the responsibility of maintenance of common services. In Vijayawada, it is

known as the Vijayawada Notified Municipal Corporation Industrial Area Service Society at

Jawahar Autonagar. In Kondapalli Industrial Area, it is known as Kondapalli Notified Gram

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Panchayath Industrial Area Service Society. In JRD Tata Industrial Estate / Autonagar,

Kanuru, it is known as JRD Tata Industrial Area Local Authority / Kanuru Notified Industrial

Area Service Society.

IALA / Industrial Area Service Society looks after the maintenance of basic facilities

of the area such as roads, power, street lighting, water supply, drainage, sewage disposal,

sanitation, greenery and plantation, etc. For strengthening the basic common facilities such as

roads, drainage, water supply, and effluent treatment, Kanuru estate is linked with Jawahar

Autonagar as part of the Auto Cluster Development Project being implemented by the

Special Purpose Vehicle (SPV), the Vijayawada Auto Cluster Development Company Ltd.

(VACDCL). The Common Facilities Centre, Common Critical Machinery Centre, common

testing centre, trade centre, common effluent treatment plant, water supply distribution

system, storm water drains, roads – cc pavements planned by VACDCL also cover the

requirements of the Kanuru estate. As VACDCL is affiliated to IALA, in respect of

developmental works executed by the organisation, and equipment procured and installed by

the Cluster Company, the maintenance part has to be taken care of by IALA – Vijayawada.

IALA Vijayawada proposes to pave cement roads to all routes at Jawahar Autonagar. The

responsibility for maintenance of infrastructure other than roads, water supply, electricity,

sanitation, etc. in the cluster will be assumed by VACDCL directly. Thus to be able to meet

the operational expenses of these facilities, VACDCL will generate adequate revenue by

collecting user charges. A number of associations and governmental organisations such as

APIIC, and DIC, are associated with IALA – Vijayawada in the implementation of its

activities. Banks extend their support to the organisation. The associations with whom IALA

periodically interacts include the following: Vijayawada Industries Welfare Association, AP

Small Industries Association, Andhra Chamber of Commerce, Vijayawada Cluster

Development Company, Lions Club of Vijayawada Industrial Area, Electricity Authority,

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Confederation of Indian Industry - Vijayawada Chapter, training centres, etc.

IALA – Vijayawada7 was formed as an independent maintenance body in 2003 in

Jawahar Autonagar. It is taking the role of the Municipal Corporation of Vijayawada under

public–private participation. IALA area of jurisdiction is divided into eight wards; and

maintenance of each ward is attended to by the respective ward members. For many of the

strategic decisions, IALA consults the APIIC, and they take a joint decision. IALA is

governed by the decisions of its Managing Committee, and for a number of things, it operates

in consultation with APIIC. The Managing Committee consists of the Chairman, Secretary,

Joint Secretary, Treasurer, and Ward Members.

The IALA is authorised by the Act to collect taxes and other payments from the

manufacturing and service enterprises under its jurisdiction, and utilise the amount for the

betterment and maintenance of common services created in the area. Property tax collected of

the order of about Rs.2 crore per year, and other collections such as building permit fees, fees

for installation of plant and machinery, transfer duty, mutation fees, are shared between the

Vijayawada Municipal Corporation and IALA – Vijayawada in the ratio of 30:70. 30%

payment made to the Corporation is towards the social responsibility of the industrial

community to the residents of Vijayawada as represented by the Corporation.

7 The presentation on IALA, Vijayawada at Jawahar Autonagar is based on discussions during

field visits, and annual reports of the Organisation of recent years.

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Chart 4.1 The Organisational Structure of all IALAs in Andhra Pradesh

Vice Chairman and Managing Director, APIIC (is in charge of all IALAs in State) at the Hqrs.

Source: APIIC

The remaining 70% is to be spent for the maintenance of common facilities in

Autonagar. Other sources of revenue for the IALA are: (a) collection of donations from large

and medium industrial units, (ii) MLA and MP funds, and (iii) provisions for infrastructure

development and other related schemes of the Central and State Governments.

Some of the achievements and initiatives taken by IALA – Vijayawada are as follows:

• to chalk out an action plan to take remedial action on non-tax payers (defaulters)

through APIIC. 34 cases are pending, of which 24 units are sick.

• Establishment of effluent treatment plant (ETP), and recycling of waste material for

reuse in various places including greenery in Autonagar

• The society is striving to add and register more members to the association, out of a

substantial number of unregistered units functioning in the area belonging to skilled

workers.

• Collaborating with Automobile Technicians Association (ATA) to know the feedback

from members on maintenance of common services

General Manager at Hqrs

Asst General Manager at Hqrs

to monitor funds and to file resolutions of IALAs

Executive Director at the Hqrs

8 Zonal Councils (for supervising operations)

Zonal Manager at the regional level for a few districts

Individual IALAs for Industrial Parks act in consultation with the nearest office of APIIC

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• Prohibition of display of flexi related type of advertising including political matters

and entertainment items in the IALA area, so as to preserve the positive environment

in Autonagar

• Efforts are being made through ATA with industrial training institutes (ITIs) to

arrange certification courses for skilled labour in Autonagar to enable them to prosper

in their entrepreneurial career.

• The ideology of IALA is to bring fairness in transactions and accomplish completion

of works, initiated by the society.

• This is the first ‘IALA’ society in the State with a geographical spread of 350 acres,

and a wide variety of and complementary automobile servicing facilities.

In the recent past, Government of Andhra Pradesh passed a resolution and issued.

G.O. to APIIC to monitor and regulate the performance and progress of IALAs

falling in its jurisdiction.

4.8 Auto Cluster Profile in and around Vijayawada

Table 4.1: Auto Cluster Profile at Vijayawada Year of Establishment 1966 (Jawahar Auto Nagar)

1997 (Expansion of Jawahar Auto Nagar) Growth of Units in the Cluster (Number) 1966 500

1975 1125 1985 2000 1997 3000 2003 3918 2011 4500

Association • The Automobile Technicians Association (federation of various small enterprise associations in the region). • In 2002, Vijayawada Auto Cluster Development Company Ltd. was registered for developing the auto cluster of small enterprises in Vijayawada.

Networking activity All units in the cluster network with each other, to complete the jobs, as and when needed.

Employment Generation (No. of persons) 1995 50,000 2003 1,00,000 2011 1,50,000

Sales Turnover 1995 Rs.300 crore 2003 Rs. 550 crore 2011 Rs.750 crore

Upgradation of Technology Tools & Wash Pumps are comparatively modernised. Forging units have slightly upgraded their technology. Boring units are still manually operated.

Source: VACDCL, Vijayawada.

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4.9 Current Status of the Cluster

The following are the details of manufacturing, servicing and marketing outlets

available in the Autonagar Cluster, Vijayawada, and their estimated annual turnover as per

the records of the Auto Technicians Association in 2011.

Table 4.2: Vijayawada Auto Cluster-Trade-wise Number of Enterprises and Turnover (2011)

Sl.No. Activity No.of

Units Turnover (Rs.

lakh) 1 2 3 4 1 Manufacturing units – Medium & Small

scale 310 400,00

2 Engine Reconditioning works 165 20,00 3 Engine Service & Mechanics shop 850 40,00 4 Light Engineering Workshops 260 15,00 5 Body repairs & Cabin repairs 340 10,00 6 Body Building Works 124 35,00 7 Fuel Injection repairs & pump calibration 96 12,00 8 Blacksmith workshops 300 7,00 9 Spray painting works 150 10,00 10 Upholstry units 75 3,00 11 Auto electrical workshops 400 12,00 12 Tyre retreading & vulcanising 130 8,00 13 Radiators servicing 150 6,00 14 Clutch & Brake drum servicing 80 4,00 15 Saw mills for timber 30 9,00 16 Spare parts retail outlets 900 100,00 17 Iron & Hardware – Bolts, etc. 90 28,00 18 Miscellaneous trading activities 50 31,00 Total 4500 750,00

Source: ibid.

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Table 4.3: Overview of Vijayawada Autonagar- (2011)

Total investment made by the units in the cluster

Rs.500 crore

Sales Turnover per annum Rs.750 crore Employees 1.50,000 Nos.

(Projected to 1,75,000 Nos. after 5 years) Profit Margin 15-25% Market Heavy vehicles of around 5000 Nos. are being serviced

annually in this cluster, and 2000 new vehicles came into operation. The customers are spread over Andhra Pradesh and the neighbouring States

Technology practiced Manual to semi-mechanised Exports Only 5 units are exporting the products such as radiators,

cylinder liners, etc. Manpower Semi-skilled to skilled and experienced Physical Infrastructure a) Roads Work on CC roads and pavements for a length of 12 kms. has

been completed. BT road from NTRCircle to 100 ft. road has been laid.

b) Water supply Drinking water supply distribution system to the entire Autonagar has been completed. It is being used.

c) Electricity Sub-station exists d) Drainage 1 Open drain exists at the old estate.

2. Drainage system has been completed for the expansion area at Kanuru.

Common facilities Common Effluent Treatment Plant, Design Centre, Testing Laboratory, Training Centre, Raw Material Bank, have been established under the Auto Cluster Project. ETP has started functioning. The others will become operational during early 2013.

Social Infrastructure 420 houses are provided. Source: ibid.

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4.10 SWOT Analysis of Auto Service Enterprises

Table 4.4: SWOT Analysis of Vijayawada Auto Servicing Activities

1 Strengths

a) Vijayawada is a nerve centre of transport industry in the State. b) Located on two National Highways NH 9 & NH 5. c) Availability of local skilled workers who are able to quickly adopt the changes in technology. d) Entrepreneurship qualities among workers of the cluster. e) To facilitate forward integration for the cluster units, an Auto Corridor project is initiated by the State Government at Mangalagiri, between Vijayawada & Guntur cities

2 Weaknesses a) Technical Education level among the workers is very low. b) No awareness among the cluster units regarding opportunities in export market. c) This cluster is mainly oriented towards repairs & servicing of heavy vehicles, and not being upgraded to manufacturing activities. d) Only 5 units are exporting their products, which is negligible considering the large number of units existing in the cluster. e) Non-adoption of modern technologies f) No diversification is planned and taken up g) Stagnation of activities at a level due to various reasons

3 Opportunities a) Manufacturing and servicing units in the cluster can be modernised and upgraded so as to be networked with Automobile Manufacturers for supplying original equipment. b) Also the units can manufacture quality products for replacement market in other countries, apart from India. c) Spare parts kits can be manufactured by the combined strength of the units, and supplied to both export and local market.

4 Threats a) High rate of technological obsolescence of various automobile models calls for modernisation of technology, and changing over :to new designs. b) The financial instability and project cost over runs, thus, negatively influence the viability of the units in the cluster. c) Unhealthy competition among the constituent units in different activities. d) Setting up of units at strategic locations around Vijayawada by experienced technicians through migration. e) Development of Autonagar at each District Headquarters by the State Government

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4.11 Performance Review of the Cluster8

4.11.1 Landmark History and Performance of the Cluster

The cluster of auto component manufacturing units, auto repair shops, and related

activities in Vijayawada is an agglomeration of several units which have grown mainly in

terms of their number due to increase in automobiles of the city and the surrounding region.

In terms of performance of these units singly or jointly, there does not seem to be any

remarkable and perceptible improvement in the cluster. Very few medium scale units are

manufacturing auto components such as cylinder liners, radiators, tread rubber, rubber

sheets, etc. and a majority of the manufacturing units are in the small scale sector operating

as ancillary units to the above medium scale units. Also activities such as body building of

heavy vehicles, auto repairs & services form part of the jobs of majority of the small units of

the cluster.

4.11.2 Products and their Markets

The major automobile components manufactured in the cluster are cylinder liners,

radiators, bolts, jacks, tread rubber, tyre sheets, etc. Cylinder liners are being exported, and

radiators, bolts and jacks are sold in the domestic markets. Heavy vehicle body building is the

major activity of the cluster and the customers are spread across Andhra Pradesh and the

neighboring States. Most of the units in the cluster are engaged in auto repairs and workshop

units, and are catering to local markets.

A strong linkage with the local consumers obviates the need for small & micro

enterprises to advertise and promote their products formally. For such products, there are no

visible and easily measurable standards which would necessitate special testing the products

by technical laboratories within or outside the manufacturing premises of the units. This is

8 Project Report on Auto Cluster Development in Vijayawada submitted by VACDCL to the Union

Ministry of MSME (2006).

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compounded by the fact that brand consciousness among consumers is low.

In terms of the size of the market segment, low-income segment could be estimated to

be at least 3 times the size of the upper end of the market. These become very important since

the entrepreneurs would consciously or otherwise set up their enterprises to meet the

demands of their consumers accordingly.

Total exports are quite small compared to the domestic market, and majority of the

enterprises depend on the replacement market. Several of the uneducated entrepreneurs

expressed utter sense of ignorance about the quality certifications, OEM (Original Equipment

Manufacturers) standards testing, etc. Besides, there is no suitable mechanism to enlighten

the entrepreneurs about the requirements of quality, cost reduction, testing, etc. that change

from time to time.

4.11.3 Production, Technology and Testing

• Low capital intensive small units predominate: Except for a few auto component

manufacturing units, majority of the units are low capital intensive, and are based on

job work or repairs or service.

• Predominantly manual operations: The process of manufacturing in most of the small

units is primarily manual whether it relates to manufacturing or workshop or service.

• Raw material is expensive and not of uniform grade. The major raw material, steel, is

available through the wholesalers / dealers at Vijayawada. However, it is expensive

compared to the availability of the same to the other cluster units in India. Almost all

the units face the problem of procuring raw material of uniform quality.

• Usage of certain machinery and equipment dictated by necessity: When production

increases, introduction of certain equipment becomes necessary since the requisite

quantity and quality of production is difficult to achieve through manual

processing without the aid of supplementary equipment to reduce the drudgery of

manual work involved. All these equipments are easily available in the local

market itself. This equipment locally produced with indigenous technology and

design is often an innovation worked out by the entrepreneur and local machinery

manufacturers with inputs mainly from the former.

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• Personal judgement replaces formal testing: During the process, manual testing and

personal judgement is more relied upon than the testing on equipments. A select few

units from among the medium scale units do have the facilities for in-house testing

and some times get their products tested at the external laboratory as well.

• Inadequate testing facilities: Majority of the units of the cluster are not equipped

with the testing facilities for raw materials and finished products.

• Training & Labour: A common linkage among most of the entrepreneurs observed

was that either they had been trained in the units which their elders started and

managed, set up their enterprises after gaining hands-on experience as workers in

another such unit for a long period. No formal training system exists in the cluster.

Problems are sorted out based upon skills developed due to accumulated experience.

While several entrepreneurs expressed their desire to develop the skills of the

employees by getting them formally trained through short-term courses, non-

availability and lack of knowledge about such courses was the major drawback.

Majority of the entrepreneurs in small scale units have never visited an auto exhibit in

Buyer Seller Linkage meet or training institutions to update their knowledge about

machinery available, new design/models, technology of component manufacturing

etc. that could be used for the better.

Management skills of the entrepreneurs are limited. Cost of the product is not

followed for pricing the product in micro and small enterprises. Accounts are hardly

maintained and if maintained, it is with a view to get over the statutory requirements related

to taxation, banking, and finance. With the growth of enterprises, the complexities of the

business also grow, which several small entrepreneurs find difficult to face. Most of the small

entrepreneurs, when asked about their future plans, not only denied any growth plans but also

reflected their resolve to remain small. To avoid regulations of the labour laws related to the

provision of statutory employee benefits, minimum wages and provision of other basic

facilities, the muster rolls of the small and micro units don't reflect the actual labour

employed. In other cases, the persons were stated as casual workers hired for a specific task

during the day. Non-availability of labour is not a problem in the cluster.

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4.11.4 Linkages in the Cluster and Potential for Outsourcing for Auto Components

A high degree of heterogeneity: The units in the cluster are highly heterogeneous in

terms of range of products & services, technology used, problems faced and facilities

required therein. The linkages among the units are, however, weak. This is because the level

of organisation, type and strength of linkages that exist within the various manufacturing

units producing different range of products don't reflect closeness among themselves.

Nature of industry is conducive for subcontracting relationships. Also horizontal

cooperation exists among body building units, auto workshops and painting and auto electric

service units in the cluster. There is no unhealthy competition among the cluster units.

Majority of the units joined hands to form their associations, and the associations are actively

coordinating with the Government Departments and Ministers to get the required facilities for

the cluster. Also, they carry out various social programmes sponsored by the State

Government in the cluster area.

Auto majors across the world would like to outsource a number of components

considering the rising production costs in the developed countries. Developing economies

such as India, therefore, enjoy ample potential to strengthen supply base to engage as a major

outsourcing base. In this context, experts see immense scope for the growth of tier - II and

tier - III auto component vendors’ base in the country. Likewise, exports of auto components

from the country are projected to go up gradually to the level of US $2.5 billion by 2010.

To catch up with the growing opportunities overseas, Indian Auto Components

Industry has to ensure:

Improved utilisation of process capability of existing machines

Enhance value added content in the value stream inside the factories

Upgrade the production technologies

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4.11.5 Critical Gaps identified in the Cluster

The following are the critical gaps which are acting as constraints for the development

of the cluster as observed at the time of the preparation of the detailed project report (DPR)

on the Auto Cluster Project in 2003. These continue to be the critical gaps, even in 2011. The

implementation of the Auto Cluster Development Project will enable entrepreneurs to

overcome the constraints listed here. After the common facilities being implemented in the

Cluster Project become functional, considerable extension work is needed to arouse the

consciousness of entrepreneurs to actively utilise the services of common facilities

developed in the area in the near future.

Table 4.5: Critical Gaps identified in the Auto Cluster at Vijayawada (2011)

Area Gaps 4.1 Testing

facilities Most units don't have Laboratory facility for testing raw materials and finished products.

4.2 Quality Assurance Practices

1. Most units do not have ISO/QS 9000 certification. 2. Good Manufacturing Practices (GMP) are rarely observed. 3. Most units are not well versed with Global Automobile Standards such as JISC, ASTM, EU, and DIN. 4. Workers are not educated enough to understand the intricacies of design and quality.

4.3 Market Focus 1. Over-dependence on repairing & land service sector segment. Not much focus on components segment. 2. Only 5 units are exporting. No significant exports from other units. 3. No effort to build linkages with OEMs (original equipment manufacturers) worldwide. 4. No linkage with global / country supply chain. 5. Products from the cluster generally do not enjoy any brand image. Only products from a few bigger firms enjoy brand image. 6. Units of the cluster are unaware of the export market assistance schemes of Government of India, export market linkages as well as export requirements. 7. Major automobile manufacturing units are not located near the cluster. 8. E-commerce approach for outsourcing, supply and procurement is not adopted.

4.4 Raw Material Procurement

1. Consortia approach in procurement of critical raw materials is unknown. Hence, no economies of scale in raw material procurement. 2. Facility for stocking critical raw materials does not exist. 3. Working capital requirement for procurement of metal is high, thus, creating additional financial burden on the units.

4.5 Technology 1. Most of the units in the cluster employ manual labour to semi-mechanised process. 2. Very low value addition to the automobile service activities and spares

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manufacturing activities. 3. Modern machinery is not being used to produce quality products, and enhance production capacities. 4. Most units are unaware of energy conservation methods. There is scope for reducing power/energy consumption. 5. Most units in the cluster focus only on Heavy vehicles segment, and are not interested in cars and other automobile segments. 6. Low machine tooling capability.

Source: Project Report on Auto Cluster Development in Vijayawada submitted by VACDCL to The Union Ministry of MSME (2006) and discussions with leading entrepreneurs of the Auto Cluster during 2012.

4.12 Vijayawada Auto Cluster Development Company Limited (VACDCL)9 The Special Purpose Vehicle (SPV) promoted by the Automobile Technicians

Association and other allied affiliated associations in Vijayawada dealing with activities

relating to the automobile trade, known as VACDCL, strives for enhancing wealth creation

through the establishment of common infrastructure for use by all the automobile servicing

and component manufacturing enterprises in and around Vijayawada. Its vision is as follows:

to increase the effectiveness of local enterprises, to introduce global quality systems, to

identity new products/services/markets, and to create suitable infrastructure to cater to the

emerging needs of the enterprises in the automobile trade. Its vision for enhancing

competitiveness is set at a higher level in the medium term perspective. VACDCL is

responsible from conceptualising to planning, design, construction, commissioning, and

managing the new infrastructure facilities created for technological upgradation of

automobile servicing enterprises.

The Department of Industrial Policy and Promotion (DIPP) of the Ministry of

Commerce and Industry, Government of India, introduced the Industrial Infrastructure Up-

gradation Scheme (IIUS) for upgrading the existing clusters of micro and small enterprises.

The scheme envisages bringing about qualitative improvements in the industry by developing

the necessary infrastructure through public-private partnership. Based on the estimates of

9 VACDCL Annual Report 2010-11, and discussions with the Chairman and Managing Director, and a

few Board Members of VACDCL.

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project cost approved by the Union Ministry for the Cluster Development Plan, the Central

Government provides 75% of the project cost, the State Government 10%, and the remaining

15% is to be mobilised from the beneficiary enterprises and industry associations. As per the

Detailed Project Report (DPR) of the Auto Cluster Development Project at Vijayawada

approved by the Union Ministry, the total project cost envisaged for the up-gradation of

infrastructure facilities and creation of new support services works out to Rs.62.38 crore to be

implemented in two phases: project cost of Phase I – Rs.30.67 crore, and Phase II – Rs.31.71

crore. The break up of contributions of the Centre, State and local associations/entrepreneurs

for the first phase sanction of Rs.30.67 crore is given in Table 4.6 activity-wise.

Table 4.6: Components of the Auto Cluster Project - Funding Pattern of 1st Phase

(Rs. crore)

Activity Total Cost

Govt. of

India

State Govt.

Local bodies Societies/

Associations/ beneficiaries

1 2 3 4 5 100% 75% 10% 15%

1. Roads & CC pavements 9.98 7.49 0.998 1.49 2. Storm water drains 4.52 3.39 0.452 0.68 3. Water Supply 3.55 2.66 0.35 0.53 4. Effluent Treatment Plant 1.03 0.77 0.103 0.15 5. Trade Centre 2.51 1.88 0.251 0.37 6. Common Critical Machinery Centre 6.58 4.94 0.658 0.99 7. Common Testing Centre 2.50 1.88 0.25 0.38

Total 30.67 23.01 3.07 4.60 Source: VACDCL Annual Report 2010-11.

4.12.1 Objectives of the Project and Facilities to be Created10

♦ to upgrade, develop / transfer the technology, quality improvement through

common testing facilities, skills upgradation, development of infrastructure

facilities like roads, water, and market promotion for the auto component industry

cluster.

♦ to Promote, Design, Build, Construct, Maintain and Operate auto component

industry for promoting domestic manufacturing and servicing units, and export

10 VACDCL Annual Report 2010-11

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oriented units, and doing all such other lawful things as are incidental or

conducive to the attainment of the above objects.

♦ to identify new products / services / markets

As indicated in Table 4.6, the activities envisaged under Phase I of the Project can be listed as

follows. The details of each item and progress of works are given later. (i) Common Critical

Machinery Centre (CCMC), (ii) Common Testing Centre (CTC), (iii) Trade Centre (TC), (iv)

Effluent Treatment Plant (ETP), (v) Water Supply / Distribution System, (vi) Road – CC

Pavements, and (vii) Storm Water Drains (SWD).

1. Common Critical Machinery Centre (CCMC): Project cost: Rs.6.58 crore

Precision Tool Room is indispensable for any manufacturing activity. It is all the more

relevant in today's consumer driven society where model life cycle is short. This opens up

vast opportunities to small scale entrepreneurs / design engineers to utilise the procured

CCMC equipped with the latest world class CNC machining capabilities with rapid

prototyping equipment which saves time and money in product development. Machinery

procured include 5 axis CNC Machining Centre, CNC Lathe Rapid prototyping, Cylindrical

grinding, horizontal boring, and heat treatment equipment with all attachments & accessories.

CAD, CAM design softwares like Catia, Pro-E & Analysis Software MSC Nastron are also

procured for the Design centre.

Other machineries, which are not locally available, and are useful to a majority of the

enterprises are also included.

2. Common Testing Centre (CTC): Project cost: Rs.2.50 crore

A modern testing & calibration facility with ISO certification and accreditation is

envisaged to benchmark and attain international quality standards in product reliability. It

provides access to the latest precision testing equipment with certification which is otherwise

unaffordable to a small scale enterprise. A small enterprise can obtain ISO certification

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through a tie-up with the Common Testing Centre without owning expensive equipment.

Common Testing Centre houses

(i) Material Testing Lab with the latest spectrometer for ferrous and non-ferrous material

testing & other testing equipments.

(ii) Metrology Lab consists of standards room with the latest calibration equipment to meet

World Standards, and state of the art CNC coordinate measuring m/c (CMM) for

measuring multiple dimensions of any of the components, and also useful for re-

engineering purposes.

(iii) Automobile Engine Testing Lab will be equipped with engine diagnosis probe to check

engine condition without dismantling the engine and other pressure testing equipment.

(iv) Pollution Testing Lab: Vehicle exhaust emission testing which is mandatory to all

vehicles would be provided to serve the members. Air pollution can also be checked

& monitored to ensure safe & healthy environment in Autonagar & other nearby

Industrial Areas.

(v) Electrical & Electronics Testing Lab: consists of dynamic balancing m/c, multimeters

head lamps adjustment, harness testing facilities, etc.

Status of CCMC and CTC in March 2011 For the CCMC and CTC, the Board of Directors of VACDCL advised the Chairman

and Managing Director, to prepare two to three options for the revenue plan indicating the

user contribution and user charges in the light of the experiences of a few other older clusters

such as Foundry Cluster at Coimbatore (Tamil Nadu), Auto Cluster at Pithampur, near Indore

(Madhya Pradesh), and auto cluster at Pune (Maharashtra). A technical committee is working

on these aspects.

The machinery received for CCMC and CTC till date has been housed in a rented

premises at Kanuru Autonagar which is just opposite to the proposed CCMC and CTC

building under construction. Power connection has been given to the building. The machinery

has been commissioned for use by micro and small enterprises. Some more machinery is yet

to be received. The VACDCL proposes to procure some additional machinery from its own

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resources, as needed by different enterprises in the autonagar and nearby areas, beyond what

is envisaged in the Cluster Plan. During 2013, it is hoped that all the machinery of CCMC

and CTC will be put to use.

3. Trade Centre: Project cost: Rs.2.51 crore

At a time when big multinational companies are calling on countries like India &

China for outsourcing components, proper infrastructure is essential to showcase & market

our products / services effectively. With this in view a centrally located Trade Centre is

proposed. Trade Centre complex would house (i) marketing/trade offices, (ii) permanent

product display arena for local manufacturers to showcase their products, (iii) large

convention hall / exhibition area (for short-term exhibition), (iv) conference rooms with

audio-visual equipment for business presentations, (v) common reception,

telecommunications, broad band internet connectivity, common website, data bank & other

world class facilities to attract foreign buyers. The structural design for the proposed building

has been approved. Technical estimate is being processed. Building construction will

commence in the near future.

4. Effluemt Treatment Plant: Project cost: Rs.1.03 crore

A Common Effluent Treatment Plant (CETP) is envisaged to treat the liquid

effluents released by industrial units. CETP is designed to meet the current & future

requirements of pollution norms. Work on the erection of the Plant has been completed and

trial run has also been attempted. AP Pollution Control Board has permitted the

commissioning of the Plant. APIIC has permitted the recycling of the treated effluent in and

around Jawahar Autonagar for the green belt located nearby. The ETP Committee has entered

into an agreement with a contractor for operating the Plant for one year. The ETP has started

working, and is generating revenue.

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5. Water Supply / Distribution System: Project cost: Rs.3.55 crore

Water supply to industrial units is grossly inadequate at present. Pipeline distribution

network of 18 kms was taken up by VACDCL to provide drinking water to the immediate

population of 80,000 & ultimate population of 1,20,000 from the over head tanks of the

Municipal Corporation, Vijayawada. The distribution network, scouring of pipeline work, and

inter connections work have been completed. The distribution network is being used a

present.

6. Roads - CC Pavements: Project cost: Rs.9.98 crore

Due to heavy vehicular traffic, roads are badly damaged in the industrial area including

Jawahar Autonagar. VACDCL took up CC roads & pavements for a total length of 12 kms, and

effectively completed the work. B.T. Road from NTR Circle to 100 Ft. Road, Autonagar,

about 1.7 kms was taken up by VACDCL, and the work was completed in August 2008.

7. Storm Water Drains: Project cost: Rs.4.52 crore

The drainage system at New Autonagar, Kanuru was taken up by VACDCL which is

a long felt need. The work was completed in 2012.

4.12.2 Status of the Cluster Project, and Benefits accruing to Industry from the Vijayawada Auto Cluster Development project Work on all aspects of Phase I of the Vijayawada Auto Cluster Development Project

including the construction of the Trade Centre building and facilities to be provided in the

Trade Centre are expected to be completed by the end of 2013. VACDCL is confident of

obtaining approval from the Union Ministry of MSME during 2014 for sanctioning the

proposals contained in the detailed project report of Phase II. It is hoped that during 2012 and

2013, all the works completed in Phase I will be put to use by micro and small enterprises in

and around Vijayawada, and the implementation systems will also be finalised by that time.

Experiences of implementation of Cluster Development Plans in the neighbouring States will

be taken into account at various stages of implementation of the Vijayawada Auto Cluster

Development Plan, apart from analysing the feedback received from the user enterprises in the

industry. The user enterprises in the Vijayawada Auto Cluster have expressed overall

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satisfaction on the pace of the implementation of the Project, and are optimistic that the rest of

the work will also be completed in the near future to their satisfaction. The analysis of the

feedback of respondents as presented in Chapter VI suggests the need for strengthening the

quality of certain services to meet their present and future needs.

The benefits expected to accrue to the industry due to the upgradation of the Auto

Servicing and Component Industry at Vijayawada are as follows:

i. Up-gradation of Technology helps in the manufacture of Auto Components and

Servicing of Vehicles with high quality and competitiveness in the market.

ii. Cluster approach contributes to appropriate technology transfer, information sharing and

quality improvement.

iii. Cluster approach stimulates the establishment of more ancillary units in the

vicinity, and generates more employment opportunities.

iv. It promotes product design and development through focussed support and

Association with R & D institutions. Cluster approach helps in developing /

Setting up common facilities like raw material depots, testing facilities, design

centre, information labs, etc.

4.13 Conclusion

The main conclusions of the chapter are recapitulated in following points:

(i) Krishna, Guntur, and Hyderabad districts have developed automobile servicing

clusters over the years. The industry in these districts has the potential to move in the

direction of improving its manufacturing base to enter the manufacture of automobile

components to cater to the needs of automobile manufacturing multinationals in

various countries. Technological upgradation, certification and standardisation can

help the industry to improve the competitive ability to withstand domestic and global

competition, and also facilitate closer contact for the cluster enterprises with the giant

automobile manufacturers within the country and abroad.

(ii) Various phases of development and the composition of automobile servicing enterprises

in Vijayawada have demonstrated high degree of inter-industry linkages, and also the

goals that the enterprises can collectively aim at reaching for improving the industry

prospects.

(iii) The pro-active role of Automobile Technicians Association and its member associations

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in Autonagar, as well as of the Industrial Area Local Authority/Industrial Area Service

Society has demonstrated high level of orchestration in their activities, and collective

endeavours to enhance the competitive strength of various players. Though the results

achieved so far are quite good, much more remains to be done to upgrade the stature of

the industry, and its linkages with the automobile manufacturers in other parts of the

State and the Country.

(iv) The case study has also established as to how systematically the Auto Cluster

Development Project has been implemented, and the benefits accruing to the member

enterprises. Vijayawada city has conferred many locational advantages to the automobile

servicing industry from the early years of the development of the industry. The industry

as a cluster planned the implementation of the Auto Cluster Project, with the support of

the Union Ministry of MSME. Out of the total project cost of Rs.62.38 crore covering

two phases, work on the first phase investment of Rs.30.67 crore has been completed;

and the member enterprises are able to take advantage of the infrastructure created so far

for enhancing the competitiveness of the industry, and to improve the industry prospects.

Successful experience of the Vijayawada Cluster is a shining example for many other

regions to emulate this pattern. The collective endeavours of the entrepreneurs and their

associations have been a model for other regions to adopt similar strategies.

Infrastructure facilities created are common critical machinery centre, common

testing centre, trade centre, effluent treatment plant, water supply distribution system, roads -

cc pavements, and storm water drains. All the created facilities, with the exception of the

Trade Centre, are already operational. The entire automobile servicing enterprises in and

around Vijayawada can utilise these facilities. Cluster approach inter alia contributes to

appropriate technology transfer, information sharing, and quality improvement. The

enterprises at Kanuru have already demonstrated the successful implementation of lean

manufacturing techniques, and similar techniques for improving their contribution to the

industry. Opportunities for outsourcing auto components available for Indian manufacturers

can be taken advantage of by the Vijayawada auto cluster enterprises in the near future.

****