What made Maruti the success it went on to become? Nobody can ever know what Mrs Gandhi had really hoped for when she decided that the assets of Sanjay’s Maruti Limited should be nationalized and transferred to a public sector company. She did not live long enough to see the success of the company, though she did see the start of sales. It is most unlikely that she would have visualized that in twenty-five years the company would have a production capacity of a million cars a year, be by far the dominant player in the Indian market, and be used by SMC of Japan to design and manufacture cars for the world markets.
The success of Maruti was undoubtedly beyond the expectations of both the partners when they decided to create a joint venture in 1982. Suzuki, despite his decision to invest in Maruti, was actually quite apprehensive of what would happen in India, partly because of his not-so-happy experience with the SMC project in Pakistan. He initially limited investments in the Maruti project to create a capacity of 40,000 cars a year and, despite the heavy bookings received for the Maruti 800 on more than one occasion, he was very cautious about expanding capacity. He was undoubtedly aware of the political nature of the project and must have been briefed on how public sector companies were performing in India. His very cautious and step-by-step approach to investments in Maruti was not only because he was Japanese, but also because of all the pitfalls he knew existed in the way of Maruti becoming successful. He frequently cautioned me against underestimating Hindustan Motors and Premier Automobiles, saying that they had over thirty years’ experience in the business of making cars, while Maruti was a novice.
As for the government, the best that the Ministry of Heavy Industries could have hoped for was that the targets contained in the project report would be achieved and Maruti would not become another of the several loss-making public sector companies within its charge.
And yet, proving everyone wrong, the sale of Maruti cars crossed 100,000 within five years, and the company continued to grow bigger and more profitable. Maruti was an instance, perhaps an exception, where a public sector company outperformed private sector companies.
Public expectations from Maruti were not high—it was, after all, a PSU. The media and non-Congress members of Parliament were very critical, believing that the project was a political gimmick. Indeed, perhaps one of the factors which led to Maruti outperforming expectations was the fact that its failure would have not surprised many. There are benefits to being an underdog, of whom nothing much is expected and who has nothing much to lose.
Ironically, it was the political background to the project—which was perceived as a liability—that became one of the reasons why Maruti could be built on a strong foundation, and grow without being weakened by the pressures and burdens put upon all public sector companies.
Everyone knew that MUL had been established as a memorial to Sanjay Gandhi and that Mrs Gandhi wanted the project to succeed. They knew that if she found anyone interfering with the progress of the project, or hurting its prospects of being successful, the consequences could be quite serious for that person. Arun Nehru, in whose judgement she had implicit faith, was appointed to oversee the project’s progress and get results. No other public sector project ever had such a powerful godfather, to not only ensure that the management performed, but to also give protection from those who use PSUs for exercising patronage. As a result, even Cabinet ministers never tried to put pressure on the management in all the years when he was in power.
The management had a free hand to select the product to be manufactured as well as the technical collaborator, subject to the basic objectives of the project not being lost. Most people found it hard to believe that Maruti had a free hand in choosing a partner, and that no money was to be paid by the collaborator for being awarded the contract. SMC was finally chosen, not because of any political pressure, but because the Maruti management was convinced that it would be the best partner. The success of any project like Maruti is critically dependent on the choice of the technology partner, who has to not only provide product and manufacturing technology but also all other critical inputs including training, so that high levels of productivity and quality could be attained and effective after-sales systems established. As later events showed, Maruti did pick an excellent partner, and credit goes to all those involved in this process. The company’s success owes a great deal to this decision. It is quite possible that if political support had not enabled Maruti to make a choice purely on merits, SMC may not have been chosen.
The political support was also very valuable in the processing of the project report and getting the necessary approvals, so that the extremely tight time schedule for start of production could be met. This not only helped in creating greater credibility for the project and the management, but also prevented cost overruns which delays would have caused. A PSU investment proposal has to pass many hurdles before it can be implemented. Perhaps the biggest hurdle in those days was the Planning Commission, which apart from critically looking at the economic feasibility of the projects also examined them in terms of the priorities of national planning. Almost without exception, this processing took considerable time.
In the Maruti project, not only were questions raised about the demand projection for cars, but there was a fundamental objection regarding making an investment for increasing production of a private transport item, when the national priority was for public transport. While Maruti could satisfy the commission on the demand projections, and the viability of the project, the ideological point could only be dealt with politically. Without strong political support, the project would probably have failed to cross the Planning Commission barrier.
The political support and the immunity from political interference came in handy on a range of other issues—the approvals for the licence agreement and joint venture agreements, the speeding up of various clearances, duty concessions, awarding contracts for civil works, recruitments, appointment of vendors and dealers, among other things.
The importance of political commitment for meeting deadlines, and for the success of a public sector project—where cost and time overruns are the norm—were highlighted in the case of Maruti. In most public sector projects, many decisions are delayed as a result of the need to reconcile various interests, and to reach acceptable compromises. In the case of Maruti, the management was aware of the importance of meeting targets, and made every effort to do so. The management took the needed decisions, as there was no compulsion to compromise. There was a single goal to get the project started on time. It is doubtful if the same results could have been achieved if we had believed that the government was not serious about the target date and would accept reasonable-sounding alibis for delays.
One of the biggest factors for the success of Maruti was the selection of the right products to be manufactured. Over any reasonable period of time, customers cannot be expected to keep buying products which do not meet their real needs and expectations, especially when the product is a very expensive consumer durable, which, next to a house, would probably be the largest investment made by them. The decision by the Maruti management to commission a market survey to decide what kind of car to produce, and reverse the earlier decision to manufacture the large Renault car, no doubt played a major role in the success of the company. The SMC range of products, even though they were not designed for India, proved to be very acceptable to customers here. The products which followed the vehicles selected initially also proved to be successful, with one or two exceptions which did not do too well.
The success of any joint venture project is very much dependent on the right partner being selected. The choice of SMC turned out to be very much the ‘right’ one. SMC was the leader in Japan in the small car segment, and this position was attained because it not only designed good products but also had the systems to manufacture them at low cost, while maintaining high quality. Not for nothing was SMC known to be a company which gave the best value for money—the very attribute that a majority of Indian consumers look for in products. Even brand names are less important than the value which a product gives the user, over the life of its usage. The success of Maruti owes a great deal to its ability to give users high value for the money spent by them. The constant emphasis placed by Suzuki on cost cutting and increasing productivity undoubtedly helped us in meeting customer expectations.
Suzuki was the president of SMC when the decision to partner SMC was taken. He had taken charge of the company only a few years earlier, and was very committed to expanding it into a much bigger player in the global car market. He saw, when others did not, that the Indian market offered an excellent opportunity for achieving his ambition. He was also a very hands-on manager, and had an unusually perceptive eye on how to reduce costs and make improvements. This again was exactly what was needed in India, where most companies operated on a cost-plus basis for pricing products. Realizing the long-term importance of India, Suzuki decided that he would personally oversee the Indian project and not leave it to anyone else in the company. This was a very unusual decision, as normally the CEO of a large foreign company would not do this, especially for a fairly small project in a developing country. But it was a very significant decision for Maruti, as its management not only was able to benefit from Suzuki’s inputs, but Krishnamurthy and I had direct access to him and important matters could be decided correctly and speedily. The government perhaps also felt more comfortable that the president of SMC was taking so much interest in Maruti. I would certainly consider Suzuki’s direct involvement with Maruti as one of the important reasons for our success.
SMC, like most Japanese companies, but unlike many western companies, did not adhere strictly to the letter of the legal documents signed with the government and Maruti, where it believed that by doing so the project would benefit. SMC had a much more long-term perspective about benefits from Maruti than trying to make some money in the short term. For example, it ignored the limitation on the number of Maruti employees to be trained free of cost in Japan and took on more trainees than agreed upon. It recognized that such training would be of long-term benefit for the success of the company, and that if it asked for extra training fees, as was justified in terms of the agreement, the government may not allow so many persons to be trained. This training was of great help not only in making employees technically proficient but also in bringing a different work culture into Maruti.
Since SMC had confidence in the Indian management, the procedures prescribed in the agreement as to how important decisions should be made was ignored. The Maruti management and SMC’s despatched personnel had good communication, and first Krishnamurthy and then I were able to take all decisions required for day-to-day working. A very good mix of Indian and Japanese knowledge and experience could be achieved. This not only speeded up the process of decision making but also motivated the Indian management, as we came to believe that we were trusted. Indeed, in any good joint venture, agreement documents should not need to be referred to after they have been signed. If that happens frequently, the chances are that the joint venture will not survive, or at least would not be a real success.
Having the right products for the market, a good partner and political support ensured that Maruti had got off to a good start. However, as the saying goes, well begun is only half done. Strengths have to be developed and nurtured to provide sustained high performance over a long period of time. The fact that Maruti continues to be the market leader even after a quarter of a century, and in a highly competitive market, is because it institutionalized systems that enabled it to build on the initial advantage of political support and a good partner.
Perhaps the most important factor behind the continued success of Maruti was the work culture which we were able to introduce. This not only resulted in creating a very productive and participative workforce but also extended to dealings with all stakeholders, including vendors, dealers and customers.
Krishnamurthy and I had recognized that making the project a success would be a Herculean task, given government policies and priorities, the limited market and the fact that Maruti was a public sector company. But we were determined not to fail. One of the advantages of having a Japanese partner was that we could get a much deeper insight into how the economic miracle happened in that country. We soon realized that the real reason was the work culture created after the Second World War. Japan sorely lacked natural resources as well as energy sources. Both had to be imported, along with food items. To pay for the imports, goods had to be exported, but the main potential market—the United States—was thousands of kilometres away. The cost disadvantage of importing raw material and exporting products over long distances had to be overcome in order to be competitive in this market. The only resource available was the Japanese people, and they had to work in a manner that manufactured goods could overcome the cost disadvantage and be competitive in terms of both quality and cost. Japanese managers devised ways of making this happen by bringing in a very different work culture and Japanese exports soon dominated world markets.
We came to the conclusion that in order to make Maruti a real success, we had to replicate this productive work culture. We spent long hours discussing the Japanese experiences and the transition towards excellence with SMC executives. We realized that nothing in the PSU system stood in our way, and what we wanted to do was practicable provided all of us were willing to change. In particular, managers had to leave their egos behind at home, and derive their satisfaction from the success of the company rather than from the false trappings associated with senior positions in the government and PSUs.
With long stints in the public sector and the government, both of us understood what could be done even within the public sector style of management. Public sector managements are rarely able to successfully fight for changing rules and procedures governing their working. The decision-making process in the government is very unfriendly towards change. In addition, PSU managers do not have any real motivation to try to make improvements in the work system, and they generally take the line of least resistance. Following precedents and keeping paperwork in order is a safer way of working.
Trying to bring about changes meant a huge increase in workload, possible risk of antagonizing vested interests as well as the chance of failing. Neither of us were typical public sector managers, and we were willing to go the extra mile to achieve our objective of making Maruti different and to reach international levels of performance. This came more from personal motivation than anything in the working environment. At the same time, we had to keep in view the limitations of our position as PSU managers, and realized that we could not seriously ruffle bureaucratic feathers. Our experience of having worked in PSUs and the government was of great help in navigating and implementing our strategy for achieving excellence. We were convinced that nobody in the government would object to our introducing a new work culture, provided it did not create any public controversy or raise difficult questions in Parliament.
I was also helped by the fact that I had spent twenty-six years in the Indian Administrative Service before getting absorbed as a Maruti employee in 1982. Most of my colleagues were then holding important positions in the government. Some of them probably felt I had taken a wrong decision in joining Maruti and that they needed to help me! Whatever the reason, I could, for many years, get solid support from various ministries. This helped in many situations when serious problems arose and which could not have been resolved without intervention by the concerned ministry.
The workers really had no difficulty accepting the outward changes which were a part of the new work culture. They liked the common uniform for all, one canteen, open offices and common toilets and similar actions designed to create greater uniformity among all employees. More difficult was the issue of how to make them change their attitude towards the management and start to act as if they were stakeholders in the performance of the company. We realized that employees would only behave differently from their counterparts in other companies if they came to believe that it was in their interests to accept the new work culture, and that doing so would result in enriching their lives and careers. I believed that most workers were looking for job satisfaction, recognition and financial rewards. In accepting the work culture recommended by us, it was important to ensure that they did not feel that they were being exploited in any manner. In fact, they had to be made to believe that they were becoming partners in creating a great enterprise and that this would not only bring financial benefits but also status and recognition.
A new way of thinking had to be created amongst workers and this could only be done by a continuous process of education. Since this teaching would be done by the managers, it was also necessary to change the negative perception which workers traditionally had about their managers and the management. This meant that policies and all actions of the company and its managers had to consistently, and without exception, reinforce the belief that the management was sincere and meant what it was saying about the work culture and the future direction which the company would take. Managers had really to walk the talk.
Changing the attitude of some of the senior managers who were inducted in the early years was more difficult. Used as they were to a hierarchical organizational structure, they were uncomfortable with the flat Maruti structure, with its emphasis on egalitarianism and frugality. Many of the practices which we introduced to create teamwork and a sense of belonging to Maruti went against all their past experience and expectations of the future when they attained more senior positions. Some managers could not adjust to this changed situation and tried to do things their own way. We had no option but to ask them to look for other jobs. Most managers found that the new approach to team building was actually resulting in the company making good progress, and the success was rubbing off on them. In a short time, there was widespread awareness that Maruti was different from other PSUs and was actually fulfilling promises and meeting all targets. The media and the public recognized this and managers from Maruti were praised for what they were doing. This compensated for the absence of the usual trappings of status, strengthened the new work culture and led to its acceptance by all employees.
Both Krishnamurthy and I understood the importance of the leadership setting an example for other managers and the workers. The changes we wanted would never be really accepted unless everyone saw that both of us were fully and sincerely committed to them. Our body language had to carry conviction that we actually believed in the changes we were introducing. The hopes created amongst the workers, by the initial pronouncements, would not last unless backed by consistent actions by the top management. This meant that we both needed to follow all rules more strictly than anyone else. Thus we were meticulous about wearing the company uniform, eating with the employees in the canteen, and being punctual, among other things. We were particularly careful about how we used and looked after company assets. When I became managing director in 1985, I had the wooden door to my room replaced by a glass panel. Any employee could walk in if I was not having a meeting, or a visitor. I was usually amongst the last persons to leave office in the evening.
Workers are innately shrewd and good judges of people. The Maruti management’s credibility was quickly established, especially after action was taken to ensure that senior managers were not having different standards for themselves and followed all the company rules. The workers saw, and appreciated, that managers were not treated as being more equal than them. They also saw that in framing and implementing various rules and programmes, the interests of workers were always safeguarded. There was also a genuine effort to consult them and to have two-way communication. The change in the attitude of the workers brought about by these efforts was responsible for the success of the suggestion, quality circle and kaizen schemes. Workers became really involved in them and believed that they could contribute to the betterment of the company. Many companies in India have introduced similar schemes, but few have got results anywhere near what Maruti could achieve on a consistent basis. The main reason for the difference was that workers in Maruti believed that they were partners in the progress of the company, while such identification was generally lacking elsewhere.
Besides bringing the Japanese style of people management and motivation, a crucial factor in Maruti’s success was its adoption of many of the Japanese systems of work. All the workstations in the factory had boards setting out instructions for the operator. These were detailed step-by-step directions, so that even a newcomer could quickly learn to work correctly. The shop floor area had larger boards with different slogans and messages to educate workers, change their mindset and instil the right attitudes. There was repeated stress, among other things, on cleanliness, punctuality, following standard operating procedures, doing work right the first time, and remembering that the next worker on the line was a customer. Workers were encouraged to come out with new slogans and ways of communicating the required messages to their colleagues.
In addition, SMC introduced concepts never before heard in India. For example, 5S involves organizing the workplace in a way that improves efficiency. It comprises Seiri (proper selection), Seiton (arrangement), Seiso (cleaning), Seiketsu (cleanliness) and Shitsuke (discipline). This is the exact opposite of 3M—Muri (inconvenience), Muda (wastage) and Mura (inconsistency). ‘Eliminate them,’ the poster listing them exhorts. 3G relates to Genchi (actual place), Genbutsu (actual thing) and Genjitsu (actually). What this simply means is that when there is a problem, the concerned people must go to the place where it has occurred, examine it and take realistic action to solve it. And then there was 3K—Kimeraareta Koto Ga (what has been decided), Kihon Dori (exactly as per standard), Michin to Mamoru (must be followed). Over time, everyone in Maruti understood these systems and how they led to a better way of taking decisions and achieving results.
Following the Japanese way, the Maruti management was very clear that all issues should be discussed threadbare and everyone was free to air his views on each matter, but once a decision had been taken, that could not be changed unilaterally or simply ignored. This attitude was not limited to production techniques but carried over into all aspects of working. In the early days, even after it had been decided that Maruti would recruit only fresh workers and not hire them from other public sector undertakings, it was found that the production department had recruited quite a few workers from HMT and Bharat Electronics. I summoned the general manager production and asked him how this had happened in spite of the instructions being very clear. He said, ‘Yes sir, but after all I have to deliver on the production front and I thought we must have some experienced workers here.’ This attitude cost the man his job. A general manager not willing to follow company policy was not something that could be taken lightly.
The adoption of the concept of kaizen had far-reaching impact on Maruti’s success and gave it the muscle few of its competitors had. The Japanese industry had become highly competitive over the years because of small, but continuous improvements, epitomized by the concept of kaizen (kai or change and zen or good). It is a concept completely alien to the Indian management culture, especially in the public sector, which relies a great deal on precedents. Kaizen activities were taken up by cross-functional teams (CFTs) constituted from time to time and related to issues like improvements in the use of space for storage, reducing the weight of products to save cost and fatigue in handling, and shortening the distance materials had to be moved so as to save energy and cost. The teams would meet frequently till a satisfactory solution had been found to whatever problem they were dealing with, following which it would be dissolved. When another issue arose, another CFT would be set up.
One of the learnings from studying the reasons for the Japanese success in manufacturing was that if a company had good systems, and these were followed carefully by all, the results would be excellent, even if the employees were not brilliant but were only of moderate capabilities. In India, managers had rarely understood the importance of systems for ensuring quality or productivity. As a result, neither had workers been trained to follow systems, nor had managers, in the course of supervising work, insisted that systems should be observed without any deviations. Consequently, once workers thought they had learned how to do a job, they would stop looking at the operating procedures and do their work from memory. They believed that they were capable enough to do so and did not need to look at the operating instructions all the time. As a consequence mistakes were made. In order to change this culture, Maruti decided to get certified under the ISO, even though the Japanese companies did not consider this was necessary in Japan. Maruti got certified under ISO 9000 in 1995.
It was then decided that vendors, who had big problems regarding giving consistent quality, should also get ISO certified. While the larger vendors could do this by getting support from a consultant, the smaller ones could not afford to hire one. I suggested to Kumar that this problem should be overcome by Maruti itself providing consultancy to groups of small vendors. This was done and in the first instance a group of about fifteen small-scale vendors from Faridabad were trained by Maruti managers. The initiative proved successful and these small vendors could get ISO certification. It was a step towards making manufacturers more aware of the need and value of systems. It also led to Maruti partnering with the CII in 1997 to set up the CII-Maruti Quality Clusters scheme, starting with one group of twenty Maruti vendors. Kumar was put in charge of this effort, working closely with Japanese quality management advisor Yoshikazu Tsuda. The idea was to improve the competitiveness of auto component firms through a common learning process. The movement spread quickly and in 2006, there were sixty-four such clusters across India. But long before that, thanks mainly to this effort, India’s auto component industry had attained a formidable reputation for quality with several firms winning the prestigious Deming Prize, and this was one of the factors that led auto manufacturers to decide to set up shop in India when the sector was opened up.
SMC brought to Maruti the concept that cost reduction was a continuous process, and that it was always possible to make improvements and reduce costs. Despite being the lowest cost manufacturers of cars in the world, Japanese companies continued to reduce costs every year. Suzuki once told me that they were now wringing water out of a dry towel. In India the towel was dripping! The idea that costs could be reduced was alien to most Indian managements during the days of licences and no competition. Over the years, manufacturers had priced products on a cost-plus basis and had been making good profits. There was no need to worry about cost reductions. Perhaps Maruti would have worked in the same manner, but for the fact that SMC always emphasized the need to control and reduce costs. Since Krishnamurthy and I were determined that Maruti should not make a loss, we recognized that adopting SMC’s approach would help in achieving that objective. Minimizing expenditure and reducing cost became a part of the management philosophy.
Often this was at the cost of annoying politicians. For example, the company decided that as a policy no ‘with compliments’ advertisements would be given—a standard way of giving money for institutions and other projects of politicians. Maruti did not sponsor events even when requests came from important people. At the same time, Maruti also looked for ways to reduce costs in what SMC was doing. I felt that the cost of shipping CKD kits from Japan was too high, largely because of the packing volume. SMC did not think it could be reduced and said that this was the way it had been done ever since it started supplying CKD kits abroad for assembly. I talked to some of my contacts in Peugeot and Volkswagen and felt that improvements might be possible. I decided to visit them and study their CKD operations. As a result I could give evidence to SMC that the Europeans were able to pack the CKD kits in a smaller volume, even though their cars were larger. SMC accepted the point and got the packing system redesigned, resulting in enormous savings for Maruti.
All these inputs from SMC were of enormous benefit in ensuring the long-term competitiveness and profitability of Maruti. We could sail through difficult times without too much difficulty. We funded all our expansion from internal resources and have not only remained debt-free till now, but in fact are a very cash-rich company. However, there were also areas where the Maruti management had to adapt Japanese practices and change traditional ways of working, to ensure good results for the company. The policy for developing vendors and treating them as partners in all respects was innovative and resulted in huge benefits for the company. The Indian automotive component industry developed rapidly because of the support provided by Maruti to a large number of vendors. The Maruti board, which included government officers, provided full support as otherwise it would probably have been too risky for PSU managers to actively go out and support private industrialists.
The policies adopted by Maruti in the area of marketing and sales was based on the Japanese experience but modified to suit Indian conditions. Like in the case of vendors, we took upon ourselves the role of improving the skills and management capabilities of our dealers. They made profits as a result, but we wanted dealers to be profitable. This too was contrary to the norm in the government that officers should not help private people make profits. Maruti also benefited from the decision to keep profit margins very reasonable, especially when the vehicles were in short supply and commanded a high premium. This led to a more rapid growth of demand and also gave Maruti an image of not being a profiteering company.
The wide acceptance of Maruti products all over the country was greatly helped by the establishment of Maruti Authorized Service Stations (MASS), another innovation made to suit the Indian conditions. The policy for spreading awareness of the importance of using genuine spare parts, and making it possible for customers to buy these at reasonable prices, also helped customers get the best value from their cars, and gave Maruti its high reputation for reliability.
The financial independence which Maruti was able to attain, almost from its inception, helped in reducing the scope for any interference or directions from government on how to manage the company. This independence came about largely due to our devising and implementing the scheme for advance booking of cars with a deposit, and selling cars according to the computerized allotment of sale priority. The interest on the large amounts of money collected enabled us to make profits from year one. Many other car companies have since followed this system.
Continuity of management is generally considered as a key factor in the success of any institution. Maruti was fortunate in this respect. Krishnamurthy remained the managing director and CEO only till early 1985, but he continued as the non-executive chairman till 1990, and his experience and wisdom were available to us. By 1985 the success of Maruti was obvious and there were many aspirants, including those with good political connections, for the managing director’s post. However, Krishnamurthy believed in the continuity of management and he recommended that I should succeed him, since I had been with the project from the start and Suzuki was comfortable with me. His view was accepted. I remained the government-appointed managing director till 1992, when I reached the government retirement age of fifty-eight. In that year, SMC became a 50:50 equity partner and acquired the right to recommend the managing director. SMC decided that it would like me to continue for another five years—though it could have brought in a Japanese person—and the government agreed to this recommendation. Accordingly I continued as the managing director till August 1997. So for the first sixteen years Maruti was headed by only two persons, and they had been with the company since inception. I believe this was a very important reason for the success of Maruti, and the fact that the new work culture could take deep roots.
A comparatively small, but significant innovation made by Maruti was deciding to use computers and information technology from the very time of starting operations, and at a time when India was far from becoming an IT superpower that it has now become. This idea was supported by SMC and was not resisted by the workers. The IT division of Maruti did remarkable work in developing all the software and the systems, and applying them to all the departments of the company without any outside help. This led to transparency in all transactions, and it was possible to avoid some of the pitfalls associated with manual operations. Manpower could be kept under control, and as time passed, IT was extensively used in quality improvement and cost control. The spare parts operations match those of Suzuki in efficiency and to a large extent that is because of the IT systems. The shop floor of Maruti today has many systems which have been developed in-house and which lead to substantial benefits in giving customers better value for money.
Perhaps the most important reason for the success of Maruti, despite being a PSU, was that both Krishnamurthy and I, even though from a PSU and government background, had the analytical capacity to understand the inherent weaknesses of the system, and the intellectual integrity to act in a manner which could overcome them to the maximum extent possible. Having SMC as a partner, and Suzuki as a person who was willing to provide all support from his company, became extremely useful in this task. Local knowledge, not only of India but of the governmental systems, was combined with the best of Japanese experience and learning, modified as was necessary and used in all areas. Maruti showed that the human mind can overcome most obstacles.
Maruti’s stupendous progress was attributed by many people to the fact that the car industry was protected from new entrants by the licensing system till 1993, and to the support which it got from the government. These critics apparently did not realize that all Indian industries got protection because of the licensing policy, and the virtual ban on imports. Yet, not many examples can be identified of industries that, because of protection, grew as rapidly as Maruti, and attained productivity and quality levels which enabled them to export products to even west Europe, as Maruti did with its cars. In fact, protection usually led to deterioration of quality and service standards. It was also overlooked by these critics that all PSUs not only enjoyed protection but most also had total monopolies in their lines of business. They operated under the same set of laws and rules as Maruti, except that we enjoyed protection from political interference for the first few years. Yet only a few PSUs ever implemented projects on time, and within budget and achieved production in excess of installed capacity No PSU in the manufacturing sector was anywhere near as profitable as Maruti, or grew as fast as we did. The entire growth was financed from internal resources and Maruti did not depend on government funds after the start-up. Probably Maruti had labour productivity which was higher than any manufacturing industry, including private sector companies, and a unique work culture. I believe the credit for this ability to build on the start should be given to SMC and the Indian management.