Atul Raheja, Lifelong India His company has bid $15 million for 40 parts of the total 153 parts that GM is outsourcing. Next month, he will know which of the 30 global players in the race won the contract.

13 July 2003. Atul Raheja is visibly excited. Two weeks ago, he received requests for quotations (RFQ) for 153 products from the black plastics division of General Motors (GM). These were for products worth $150 million - that's six times the turnover of Raheja's plastic injection moulding firm, Lifelong India.

It took 18 hours to print out the RFQs and the 600 accompanying drawings (see picture above). Each RFQ was a 30-150 page docket containing technical specifications, material requirements and so on. "I never expected GM to throw 600 drawings at us," he gushes. This is, after all, Lifelong's first brush with exports.

In May, Raheja and 34 CEOs spent seven days in Detroit hard-selling India's auto component capabilities to leading original equipment manufacturers (OEMs) Ford Motor, GM, Delphi Corporation, Caterpillar, International Truck and Engine Corporation and Cummins. This was part of an outsourcing mission organised by the Automotive Component Manufacturers Association (ACMA). The GM RFQs came soon after the trip.

Raheja has to fly to Detroit again to attend a GM suppliers' meet on 23 July. Today he is busyplanning his bids: "I will bid for 100 parts. Even if I get 25%, my business will double. The tooling will come from GM, injection machines can be ordered in 4-6 weeks. I can expand capacity three-fold in three months. GM expects my bids to be 15% lower than the current prices. I will probably offer them 25% less..." The thought of failure never occurs to him.

26 July 2003. Raheja is back from Detroit. He sounds tired. The excitement is tempered. At GM, he saw his 30 global competitors face to face and their strength hit home.

WE HATE to be the party-poopers. But we believe there is a need to 'temper' this excitement. Let's

start with Raheja. Why on earth is the world's largest carmaker asking an untested $25-million firm to bid for components worth $450 million? Is it that desperate to cut costs? Surely not.

To the uninitiated, this is GM's first test. The speed and coherence of Lifelong's responses to the mountain of RFQs will help GM evaluate the company's managerial and technical competence. For example, GM had fired 1,000 RFQs (between 1988 and 1994) at Sundram Fasteners before giving it the first contract. Former Sundram Fasteners president K. Mohan (who is now with Fenner India) had to make six trips to the US and make 25 presentations before the company could earn its first dollar. In the 10 years since, Sundram Fasteners' exports have grown to a modest Rs 96 crore. Rico Auto, which got its first order from GM in 1994, started discussions in 1988. Its current exports - Rs 25 crore.

Doing business with global automotive OEMs is no cakewalk. It needs guts, tenacity and determination. The rewards take a long time to come. Deep Kapuria, president, ACMA, agrees: "With IT down, the stockmarkets and media wanted another story and found auto components. We grew 38% last year, but there is a long way to go. This is not like BPO."

So let's take a hard look at how India stacks up against its international rivals.

The US, the world's biggest auto market, imported components worth $69 billion last year. It is a good enough proxy for the $750-billion global auto parts trade. Last year, India shipped components worth $177 million to the US - that's 0.26% of US imports. In the last four years, as India's US exports inched up by $78 million, China's exports zoomed by a billion dollars and it now exports 10 times more than India. Thailand does three times more, although its main market is Japan, not the US. China's US export growth rate (27%) and Thailand's (36%) are higher than India's (25%). So we are not even catching up.

Second, China's per capita income of $800 has driven its domestic automobile industry past the inflexion point. India's per capita income ($250) has to increase to at least $600 before something similar can happen here. In 1999, India sold more cars than China. Last year, China's car sales (roughly 1.2 million) was double that of India's (600,000). "You cannot divorce the evolution of the domestic industry from its export potential. It is not conceivable to think of exports in isolation," argues T.K. Balaji, managing director, Lucas-TVS, a Rs 450-crore electrical and fuel systems supplier.