VOC Blogs ~ How the city of Pune became the ‘Detroit of the East’

Pune, the cultural capital of Maharashtra, is today a significant hub for manufacturing and automotive industries in India. It is also often referred to as “Detroit of the East”. One of the major contributors to this achievement is the micro, small and medium businesses (MSMEs) in the city.

“The role of MSMEs are crucial as they are the OEMs for all these sectors. Without the MSMEs, they (the big industries) wouldn't have been able to grow to what they are today,” says Ravindra Sonawane, All India Vice President of Laghu Udyog Bharti, adding that MSMEs are not only working as OEMS but they are also manufacturing standard machineries as well as special purpose machines for other manufacturers.

This is what makes Pune the next destination of the ET Make in India SME Regional Summit, which kicks off today (October 18).

ET Make in India SME Regional Summit is a series of on-ground events held across India to bring together local MSMEs, policymakers, enablers and industry stakeholders. These summits aim to unravel opportunities, tackle challenges and foster knowledge-sharing and networking to propel the next phase of growth for Indian MSMEs.

History
The evolution of the automotive industry in Pune started from the 20th century. Rujuta P Jagtap, Director, Maratha Chamber of Commerce, Industries and Agriculture (MCCIA), says Pune’s journey as an automotive centre began in the 1960s, when companies like Bajaj Auto started operations here. The city’s proximity to Mumbai and the presence of engineering colleges laid the groundwork for skilled labour and innovation.

Sonawane says that the post-independence era saw Pune turning from a mid-size city to a large metropolis. “Industrial development started in the outlying areas of the city such as Hadapsar, Bhosari and Pimpri in the 1950s. The first big operation to set up shop was the government-run Hindustan Antibiotics in Pimpri in 1954. The area around Bhosari was set aside for industrial development by the newly created Maharashtra Industrial Development Corporation (MIDC) in the early 1960s. MIDC provided the necessary infrastructure for new businesses to set up operations,” he says.

This was followed by Tata Motors, previously TELCO, and Bajaj Auto, which started manufacturing commercial two-wheelers and three-wheelers from this city. In the late 1990s, Tata started manufacturing SUVs, MUVs and passenger cars here.

This, and the establishment of many ancillary industries, attracted other players. “The growth of the automotive sector also led to the development of a robust network of ancillary industries, including suppliers of components and materials,” says Jagtap, also the Executive Director of SAJ Test Plant Pvt Ltd.

Mercedes Benz, Volkswagen, Mahindra & Mahindra, Fiat & others made Pune an automobile hub. “Pune is not only an automotive hub but also a manufacturer of process plants especially for chemical, food & sugar, ethanol,” says Sonawane.

Japtap points out that the government’s initiatives played a major role in this development. “The Indian government's focus on import substitution and local manufacturing led to the establishment of several manufacturing units in Pune. The economic liberalisation in the early 1990s opened up the Indian economy, attracting foreign investments. Pune saw the entry of international automotive manufacturers like Volkswagen, General Motors and Mercedes-Benz, which set up manufacturing facilities in the region,” she says, adding that companies like Tata Motors, Mahindra & Mahindra and others expanded their operations, diversifying their product offerings.
In the 2000s, Pune became a hub for research and development (R&D), with many automotive companies establishing R&D centres to innovate and improve their product lines.
From manufacturing, the city has now diversified into information technology. Venkatesh BM, Co-Founder & CEO of VOC Automotive, which recently started its first store in Pune, says that the city has diversified into a technology-driven ecosystem, with advancements in automation, precision engineering, and electric vehicles (EV) becoming core aspects of its industry. “The city’s evolution reflects its adaptability and forward-looking approach as it now integrates newer technologies such as artificial intelligence, IoT, and Industry 4.0 into its manufacturing processes,” he says.

Challenges
The transition towards electric vehicles has given the city many opportunities to grow, but it also brought some challenges. Venkatesh says that the transition toward EVs requires significant investment in R&D, infrastructure development, and the re-skilling of the workforce to meet future demands. The supply chain remains vulnerable, especially in the wake of global disruptions caused by events such as the pandemic. “This has led to material shortages and fluctuating costs, impacting production cycles. Pune’s growing population also puts pressure on infrastructure, creating congestion and logistical challenges,” he says.
This also concerns the MSMEs in the city as they are finding it difficult to survive and grow. Laghu Udyog Bharti’s Sonawane says the major challenge for MSMEs is the shortage of land, labour and finance. “Lack of industrial land at affordable price, the unavailability of staff due to a change in aspirations of the young generations and the lack of timely finance are coming in the way of MSMEs performing efficiently and getting reasonable profits. This is pushing many MSMEs towards becoming non-performing assets,” he explains

For Pune’s automotive and manufacturing industry to grow further, several strategic steps are needed. The first and foremost should be to strengthen collaboration, says Venkatesh. Building partnerships between manufacturers, technology firms and research institutions can foster innovation and knowledge-sharing. “It is also crucial to invest in training and upskilling of the workforce to meet the demands of a rapidly evolving industry. Educational institutions and companies should work together to create such programmes,” he says.

The city must also invest in a robust electric vehicle charging infrastructure by partnering with local governments and private entities, says Jagtap. “Also, the establishment of dedicated R&D centres in collaboration with universities and research institutions is needed to foster innovation in automotive technologies, particularly in electric vehicles and smart manufacturing. Encourage government grants and incentives for companies investing in innovative technologies and sustainable practices,” she says, adding that it is also vital for companies to diversify products and markets.

Jagtap also encourages support for women entrepreneurs. “In micro-entrepreneur clusters, women entrepreneurs should get subsidies from the government. There should be facilities to help them set up units and avail other services at affordable rates. By implementing these strategic steps, Pune's automotive and manufacturing industry can position itself for sustainable growth and competitiveness in the global market,” she adds.