Located 42 miles from Pune in the state of Maharashtra is a village of rice growers, who for many decades had to trek to a neighboring village to get their raw rice de-husked because their village did not have the power supply to run the dehusking machine.
Enter Cummins Inc., or rather the Indian subsidiary of the Indiana-based engine and generator maker.
In 2011, Cummins Power Generation worked with the Indian Institute of Technology, Mumbai, and non-profit Maharashtra Arogya Mandal to develop a generator that ran on biofuel generated by the oilseeds of the Pongamia tree. This innovation was used to power the village’s own electric de-husker. “If you have to understand how Indian this company is and how specifically we tailor our products to the needs of our customers, this is it,” said Anant J. Talaulicar, chairman and managing director of Cummins India Ltd.
This anecdote explains why the maker of fuel systems and power generation equipment (among other products) has emerged as a rare example of a successful manufacturer in India, making products for both domestic and overseas markets.
There are four boxes that a company must check to demonstrate whether it has been successful in an overseas destination:
- Has the company been able to use the country as a market for its products?
- Has it been able to use the country as a production base, to manufacture for the market and the rest of the world?
- Has it been able to use it as a sourcing base?
- Has the company used the country as an engineering base, to design and develop products?
Cummins checks all the boxes.
While most multinational corporations get hand-me-downs in terms of technology from their parent, Cummins does a significant part of its R&D work in India. Cummins Research and Technology India Ltd, a division set up in 2003 does analysis-led design work that reduces cycle time for new product development and minimizes time involved in physical prototype testing. In fact, Cummins is setting up an advanced technical center in Pune that will house about 2,000 engineers and is expected to come up by September 2015. “Only about 15% of that work will be targeted for the domestic economy. The rest will be for global purposes,” said Talaulicar.
When India moved from to Stage II to Stage III fuel emission norms, several automobile manufacturers installed electronically controlled engines, but Cummins created a lower-cost mechanical solution which Tata Motors used very successfully.
“Today we have significant engineering skills in the country and we are completely integrated into Cummins global engineering network in terms of the reporting relationships. Information system is seamless. We don’t simply take global technology and force-fit them for India. We significantly customize products and localize heavily,” added Talaulicar.
Localizing sourcing and making products according to the specific needs of customers is a complex business. Talaulicar, though, believes that it is inevitable because the nature of the Indian market is very different compared with other parts of the world.