Pune Auto Cluster Report

Box 1: Pune Cluster

The geographical area of Pune district comprises of 5.09% of the area of Maharashtra State.
Pune auto cluster originated in the 1940s with the establishment of key manufacturers like
TATA Motors, Bajaj, and Mahindra and Mahindra, Pune's auto cluster saw significant growth
in the 1980s due to government deregulation policies. Joint ventures and the entry of
international players such as Mercedes-Benz, Ford, Skoda, Renault-Mahindra, Fiat-TATA,
and Audi followed. The launch of TATA Indica in 1999 spurred the establishment of
automotive component units, with major hubs in Pimpri, Chinchwad, Chakan, Bhosari and
Chikali. The formation of the Auto Cluster Development and Research Institute in 2006-07
provided crucial technical support for the development of Small and Medium Enterprises
(SMEs) in Pune's automotive component sector1.
Figure: Auto Industrial Areas in Pune District
(Rohit and Deppak would give by tomorrow)

Pune accounts for approximately 30% of total vehicle production of Maharashtra,

encompassing various types. The region is characterized by five major clusters, namely
Pimpri-Chinchwad, Chakan, Bhosari, Talegaon and Chikhali 2. As a distinctive cluster, Pune
possesses all the essential components, standard parts, and processes, crucial for the auto and
engineering sectors. It stands out as one of the key centers in India capable of initiating the
production of complete automobiles or machinery, alongside Chennai and NCR. The Pune
cluster features a comprehensive auto/engineering supply chain, including dominant auto
manufacturers, tier I and tier-II vendors supporting ancillaries, and facilities for diverse
processes such as casting, forging, sheet metal work, welding, machining, plastic moulding,
tooling, assembly, and testing. Encompassing all major segments of the auto industry, such as
engine parts, transmission, suspension, electrical, and chassis components, the cluster
comprises a mix of public, private, proprietary, and partnership enterprises, representing both
international and Indian brands.

1. ACM profile of Pune

The Automotive cluster in Pune has ACMs of all sizes. Large representation is from Micro
enterprises and large enterprises are underrepresented in this cluster.

Figure 1: Enterprises Distribution by Size

1
Majumdar, P. (2021). Problems And Prospects of Small and Medium Enterprises In Automotive Component Industry: A
Case Study Of Pune Auto Cluster. Shivaji University, Maharashtra
2
KPMG (2020). Cluster Diagnostic Report IGTR Auranganbad. KPMG. https://dcmsme.gov.in/tcsp/Program
%20Overview/Aurangabad_Draft.pdf
 Large; 3.34%

Medium; 6.94%

Large
Medium
Small; 31.71% Small
Micro; 58.01% Micro

Source: iFOREST Analysis

Fifty percent of the data represents the micro enterprises while the other 50 percent represents
large, medium, and small enterprise. The impact of transition is expected to be higher in the
latter due to their higher investments in plant and machinery. Moreover, not all these
enterprises will have a logical or rational transition based on operations/production line from
ICE to EVs.

Figure 2: Enterprise Distribution Across Segment (Powertrain and Non-Powertrain)

PowerTrain
18%

Non-PowerTrain
82%

Source: iFOREST Analysis

Enterprises in this cluster clearly prefer Non-Powertrain Sub-Assemblies, with 82% ACMs
falling into this segment. By comparison, only about 18% ACMs produce components for
Powertrain Sub-Assemblies.

Figure 3: Enterprises Distribution Across Sub-Assemblies (%)

 40.00% 37.19%
35.00%
30.00%
25.00%
20.00%
15.00%
15.00% 12.34%
10.00% 7.88% 7.28%
5.57%
5.00% 3.34% 1.97% 2.23% 2.83% 2.74%
1.63%

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Source: iFOREST Analysis
Note: Others include accelerator, air conditioning, wheel, steering, software & applications, lubricants
and oil.
EV power module include: EV Battery, EV Electrical and Electronics and Traction motor

Over 67% of all auto enterprises in Pune auto cluste focus on Moulding and Process based ,
general components and Body Assembly.
2. ACMs in Pune: Size and Segment

When considering the size of ACMs, it becomes clear that the production of components for
Powertrain Sub-Assemblies is done almost equally by smaller enterprises namely micro and
small category. Power train components are manufactured most by medium sized enterprises
and least by large sized enterprises in Pune auto cluster.
Figure 4: Enterprises by Powertrain and Non-Powertrain

Large Medium

PowerTrain; 8; 8%

PowerTrain
33%

Non-PowerTrain
67%

Non-PowerTrain; 92;
92%
 Micro Small

PowerTrain
PowerTrain
16%
20%

Non-PowerTrain Non-PowerTrain
84% 80%

Source: iFOREST Analysis

3. ACMs in Pune: Size and Sub-Assemblies

An analysis of ACM distribution across Sub-Assemblies is also helpful when considered

through the lens of the size of the enterprise. Enterprises across all sizes in majority
manufacture in almost similar percentages in across all sub-assemblies with majority
manufacturing Moulding and process-based components, general purpose components and
components of body assembly.

Large Medium

Transmission Transmission
(Clutchand
Suspension /gears);
Body; 12.97% (Clutchand
Suspension /gears);
Body; 12.97%
Others;
Springs; 6.76%
2.70%
1.62% Others; 6.76%
2.70%
Springs; 1.62%
Drive Line2.16%
Breaking; (Shaft , Drive Line2.16%
Breaking; (Shaft ,
axle and Differenti- axle and Differenti-
cal); 3.24% cal); 3.24%
Electronics; 5.68% Electronics; 5.68%

Engine ,Engine Engine ,Engine

exhaust and Fuel; exhaust and Fuel;
Moulding and Moulding and
7.84% 7.84%
process based; EV Powermodule; process based; EV Powermodule;
40.54% 1.89% 40.54% 1.89%
General Purpose; General Purpose;
14.59% 14.59%
 Micro Small

Transmission Transmission
(Clutchand
Suspension /gears);
Body; 12.97% (Clutchand
Suspension /gears);
Body; 12.97%
Others; 6.76%
2.70%
Springs; 1.62% Others; 6.76%
2.70%
Springs; 1.62%
Drive Line2.16%
Breaking; (Shaft , Drive Line2.16%
Breaking; (Shaft ,
axle and Differenti- axle and Differenti-
cal); 3.24% cal); 3.24%
Electronics; 5.68% Electronics; 5.68%

Engine ,Engine Engine ,Engine

exhaust and Fuel; exhaust and Fuel;
Moulding and Moulding and
7.84% 7.84%
process based; EV Powermodule; process based; EV Powermodule;
40.54% 1.89% 40.54% 1.89%
General Purpose; General Purpose;
14.59% 14.59%

Source: iFOREST Analysis

4. ACMs in Pune: Size and Impact

Due to their majority of manufacturing in Non-Powertrain segments, and further because of
the specific Sub-Assemblies that the different sizes of ACMs in Pune tend to focus upon, the
expected impact of the transition to EVs
Both Large and Medium enterprises have 65% of firms under least impacted
category .Figures for Micro and Small Enterprises are almost identical for all impact
categories. Medium enterprises have most i.e. 21% of enterprises which belong to high
impact category.
Figure 5: Expected Impact on Enterprises

Large Medium

Highly impacted;
7.69% Moderately Impacted
14% Highly impacted
Moderately Impacted; 21%
28.21%

Least Impacted;
64.10% Least Impact
65%
 Micro Small

Highly impacted;
Moderately Impacted; Highly impacted
Moderately Impacted
13.15% 9.90% 14% 11%

Least Impacted
Least Impact; 76.96%
75%

Source: iFOREST Analysis

5. Overall Impact of EV Transition on Enterprises

In the Pune auto cluster, approximately 2/3rd of all enterprises are likely to be ‘Least
Impacted’. These ACMs are expected to face minimal disruption to the demand for the Sub-
Assemblies that they specialise in during the transition to EV. This appears to be due to their
specific focus on producing Non-Powertrain components. Alternatively, they may have
undertaken proactive adaptation strategies or possess a wide-ranging product portfolio.

Figure 6: Impact Assessment of ACMs

 Impact Scores
12

≥ 0.6 Highly
10
Impacted

<0.6 ≥ 0.3
6 Moderately Im-
pacted
4

< 0.3 Least

2
Impacted

0
0 2 4 6 8 10 12

Source: iFOREST Analysis

However, 25% of the ACMs in Pune fall into the ‘Moderately’ and ‘Highly Impacted’
categories. These enterprises will face more significant challenges in the transition to EVs.
Contributing factors may include a heavy emphasis on Powertrain components within their
product portfolios or a general incompatibility in the ICE vehicle components they produce
with EVs.

Figure 7: Enterprise distribution based on Impact (%)

120.00%

100.00%

32.03% 31.54% 32.32%

80.00%

Small
60.00% Micro
Medium
Large
40.00% 52.34% 54.27%
59.54%

20.00%

13.28% 6.71%
6.06%
2.34% 2.86% 6.71%
0.00%
Highly impacted Least Impacted Moderately Impacted

Source: iFOREST Analysis

The distribution of Impact across the differently sized ACMs is most clearly illustrated in
Figure 9 above. Therein, one sees that–

Among ‘Highly Impacted’:

 84% are either Micro or Small ACMs, indicating that smaller enterprises tend to have
a higher degree of risk in the transition to EVs.
 Medium enterprises account for 13%, and Large enterprises represent a minuscule
share of 2.3%, suggesting that, in general, these enterprises are less affected by
transition.
 This category of Impact is clearly dominated by smaller enterprises.

Among ‘Moderately Impacted’:

 60% are Micro and 31% are Small enterprises.
 Large and Medium enterprises represent 6% and 2.8%, respectively.
 This distribution suggests ‘Moderate Impact’ will also be felt among smaller
enterprises.

Among the ‘Least Impacted’:

 Small and Micro enterprises again form the majority, representing 86% of this
category.
 Large and Medium enterprises constitute 6.7% each.
6. Transition Scenario in Pune Cluster: ICE to EV
Survey findings revealed 45% of all enterprises surveyed are already supplying to EV
OEM’s. Powertrain component manufacturers of Engine, Transmission, drive line almost
don’t supply any component to EV OEM’s and majority of non-power train component
manufacturers namely body, moulding and process-based components etc. are already
supplying to EV OEM’s which shows the transition towards EV has already begun in Auto
cluster of Pune. Most of these are Micro and Small enterprises with almost equivalent shares.
Of the enterprises that supply EV components to OEMs–
 53% supply generic components used in ‘Body’, ‘General Purpose’ or ‘Moulding and
Process-based’ Sub-Assemblies. As such, these components are not specialised for
ICE vehicles and can easily be adapted to fit EV requirements.
 7% initially manufactured ICE Engine-related components but have now expanded
their portfolios to include EV components with the help of R&D or business
investments.
 PowerTrain enterprises EV Sub-Assembly;
Not interested in diversi- No Idea; 24.66% 21.92%
willing to diversify, 22%
fication
27%

ICE powertrain sub-

assembly; 6.85%

Diversifying or willing to Non-PowerTrain enter-

diversify prises willing to diversify,
73% 78% ICE Non-Powertrain Sub-
assembly; 46.58%

Current production potential line of

Share of enterprises that have either line/portfolio of transition for
diversified or are willing to enterprises that are enterprises that are
diversify diversified or are either diversified or are
willing to diversify. willing to diversify

Source: iFOREST Analysis

The survey findings give a broad sense of the current state of readiness within the cluster for
the transition to EV. These are represented in the illustration above. Major findings are as
follows–

 73% of surveyed enterprises are currently diversifying or willing to diversify their product
lines.
o Of these, 22% currently manufacture Powertrain components. This indicates
an awareness of the impending disruption to the demand for ICE Powertrain
components.
o The majority, 78%, are manufacturing Non-Powertrain components,
underscoring the widespread recognition of the need to diversify product
offerings beyond traditional ICE-related components.
 22% of surveyed enterprises wish to venture into the production of EV components such as
Traction Motors, E-Axle, EV Batteries, and EV Electrical and Electronics.
 47% of surveyed enterprises intend to diversify into Non-Powertrain products that can be
used in EVs with little or no adjustments.
o This strategic approach aligns with the growing demand for components
required by EVs while leveraging existing manufacturing capabilities.
 7% of surveyed enterprises aim to diversify into Powertrain products suitable for EVs with
minimal adjustments. For instance, components for axles and gears are largely similar across
ICE vehicles and EVs.
 25% of surveyed enterprises report a need for more clarity regarding product
diversification.

7. Workers Profiles in Pune Auto Cluster

The distribution of workers in the Pune auto cluster highlights potential challenges in
adapting to the shift to EVs. These are more pronounced in ACMs, whose business model is
heavily reliant on producing Powertrain components for ICEs.
Approximately 25% of the workers in the Pune auto cluster are employed in producing
components for the Moulding and processed based sub assembly.7.8% workers work in
‘Engine, Engine exhaust, Fuel, and Accelerator’ sub-assembly. Since this Sub-assembly will
be rendered obsolete in an entirely EV landscape, these workers risk losing their livelihoods.
The same holds true for the 7% of workers involved in ‘Transmission and Driveline’ Sub-
Assemblies.
Such findings underscore the need for proactive measures to protect these skilled workers.
This can be done by investing in reskilling and upskilling efforts. Doing so would allow
industry stakeholders to ensure that the workforce remains relevant and equipped for the
future of automotive manufacturing.

Figure 8: Worker Profile of ACMs in Pune

Worker

Micro
Large 21%
26%

Small
Medium
30%
22%
 Others 5.87074906444598

Transmission (Clutch /gears) 4.15339515140195

Suspension and Springs 4.68588654930446

Moulding and process based 25.1142498319405

Lubricants, Oils and sealing 1.3272891929604

General Purpose 12.184703012975

EV Powermodule 4.18197960155017

Engine ,Engine exhaust and Fuel 7.87538694081722

Electronics 13.5498409259649

Drive Line (Shaft , axle and Differentical) 2.73616193667701

Breaking 5.59143672286629

Body 12.7289210690962
0 5 10 15 20 25 30

Source: iFOREST Analysis

The Pune auto cluster's workforce is predominantly non-executive, comprising 79.88% of the
surveyed ACMs, indicating a significant informal character within these enterprises. The
workforce in the Pune auto cluster is diverse but the majority have secondary or higher
secondary education, reflecting majority of workforce with basic level of education. The
industry heavily leans towards on-the-job learning, with 71% of ACMs relying on practical,
hands-on experiences for skill development. This preference aligns with the finding that over
90% of micro firms incorporate on-the-job training, underscoring the industry's emphasis on
practical training approaches.
Figure 9: Current Skilling Requirement and Statistics

Requirement of EV Related Training Dependent on OEM for training

Need EV related
Training
16%
Yes
4%

Don’t need EV re-

lated Training No
84% 96%
 Association with Automotive Skil Centre Training Budget
100.0 92.5
90.0
Yes
13% 80.0
70.0
60.0 52.8
50.0 50.0
50.0 45.5
40.0
30.0
19.418.2
20.0 13.6 13.9 13.6
7.5 8.3 9.1
10.0 5.6
0.0 0.0 0.0 0.0 0.0 0.0
0.0
No Above 5 Lakhs from 2 lakhs to 5 from 50 thousand to Less than 50 No Budget
87% lakhs 2 lakhs thousand

Micro Small Medium Large

Source: iFOREST Analysis

Some key findings are as follows–

 Internal Training: More than 90% of ACMs report regularly conducting some kind of
worker on-the-job training internally.
 Lack of dependence on OEMs for Training: only 4% of firms were dependent on OEMs for
training and most of the sample is Micro and Small firms which signify that OEMs are
currently not training tier-3 and tier-4 suppliers.
 Limited Focus on EV-Related Training: 84% of enterprises do not foresee the immediate
need for EV-related training. This suggests a potential gap in awareness of and preparedness
for the impending transition to EVs.
 Association with Skilling Centres: Only 13% of enterprises use skilling centres to train their
workers. This highlights the lack of attention given to formal training programs and the scope
there is to address this gap. Formal training can add immense value to workers both
personally and for the enterprise they are employed by.
 Small Training budget for Micro and Small Enterprises: In the micro-enterprise category,
a significant majority (92.5%) indicates having no budget allocated for training. Small
enterprises exhibit a more diversified budget allocation, with a substantial portion (52.8%)
still having no budget, while others allocate budgets in varying ranges. Medium-sized
enterprises predominantly allocate budgets above 5 lakhs (45.5%), showcasing a relatively
higher commitment to training expenses. Large enterprises uniformly allocate budgets, with
50% allocating above 5 lakhs and the other 50% allocating between 2 lakhs to 5 lakhs. This
highlights the variability in the financial commitment to training initiatives, indicating a
potential area for intervention and support, particularly for smaller enterprises.
Skilling strategy adopted by majority of enterprises surveyed is in-house skilling without any
support from the government. The predominant mode of training for auto sector workers is
on-the-job learning/training (73.1%), highlighting the hands-on nature of skill development in
the industry. Worker’s skilling and training in Pune auto sector overall happened in small
batches and is a continuous process so skilling strategy for future should also be devised
according to complimentary needs of the industry partners. For Example: Short courses with
continued running in batch representation of 1-5 workers from all enterprises for 5 days and
this course keep running for next 6 months to train all workers of a particular MIDC area.

There also appears to be a significant share of ACMs who believe that EV-related training is
not immediately necessary. This is far from the truth if Pune’s ACMs intend to thrive in an
EV ecosystem. Collaboration between industry stakeholders, government agencies, and
educational institutions will be crucial in addressing this and preparing ACMs for the
transition to EV.
The impact of the EV transition on ACMs in Pune auto cluster is nuanced. While challenges
exist, particularly for micro enterprises deeply entrenched in traditional auto components,
opportunities for diversification and strategic collaborations can help ACMs navigate the
changing automotive landscape. Support from OEMs in terms of technology transfer,
reskilling initiatives, and collaborative business models can be instrumental in ensuring a just
.and effective transition for these enterprises