Ashok Leyland bus deal drives manufacturing push

Supplied

• Ras Al Khaimah plant key to attracting foreign investment
• Part of the Make it in the Emirates and Operation 300bn initiatives 

Ashok Leyland, the flagship brand of the India-based Hinduja Group, has bagged orders for 1,400 school buses to be built at its Ras Al Khaimah (RAK) factory for use across the UAE.

The deal, the company’s largest in the UAE, will be supplied from Ashok Leyland’s $50 million manufacturing facility in RAK, which is the only certified bus making factory in the Gulf region.

Analysts have hailed the deal as a major boost to the UAE’s desire to build up its manufacturing sector, part of the Operation 300bn strategy launched last year.

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The new vehicles will be the 55-seater Falcon and 32-seater Oyster models.

The deal was won by Ashok Leyland’s UAE distribution partners, Swaidan Trading – Al Naboodah Group. Most of the buses will be supplied to Emirates Transport and STS Group.

“We are very happy to receive these orders, and this is a historic moment for Ashok Leyland in UAE,” Dheeraj Hinduja, executive chairman, Ashok Leyland, said.

“These products are made in the UAE assembly plant.

“The product concepts originate in the UAE, the designs are done by our engineers there and they are assembled in the factory, with more than 55 percent of parts sourced in the UAE.”

He added that Ashok’s new electric vehicle company, Switch Mobility, based out of the UK, also sees huge opportunities for growth in the UAE and wider GCC markets.

Wes Schwalje, co-founder of Tahseen Consulting, told AGBI: “The UAE’s manufacturing localisation push through initiatives like Make it in the Emirates and Operation 300bn are key to attracting foreign direct investment to emirates like Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain.

“It is important that the focus of such programmes is on export-oriented sectors.

“It would be great to see Ashok Leyland’s manufacturing facility focus on the export of electric buses, for example, where the UAE could develop a world-class expertise in a promising niche in preparation for the energy transition.” 

Amandeep Singh, head of international operations at Ashok Leyland, added: “We are excited with the growth we are seeing in the UAE economy and the opportunity it provides.

“We have aggressive plans to further enhance our portfolio in light commercial vehicle space.”

The Ras Al Khaimah plant is a joint venture between Ashok Leyland and the Ras Al Khaimah Investment Authority (RAKIA), and has an installed capacity of 4,000 buses a year. 

Since its launch in 2008 Ashok Leyland has rolled out 25,500 buses from the plant so far.

More than 7,000 establishments in the GCC own an Ashok Leyland product, transporting 1.8 million passengers every day. The UAE plant also exports buses to African countries.

“I feel it is a good initiative from a pan-GCC need to create local employment opportunities for nationals,” Raghu Mandagolathur, CEO of Marmore Mena Intelligence, a research subsidiary of Kuwait Financial Centre (Markaz), said.

“Even though the high oil price supports the fiscal structure for now, we all know that it is not sustainable going forward. 

“Hence, GCC countries will have to seek diversification opportunities and local assembly is a good start with local procurement. Transportation is a low hanging fruit for all GCC countries.” 

Ashok Leyland, the world’s fourth largest manufacturer of buses and a $4.2 billion company, has nine manufacturing plants spread across India, the UAE and the UK.

In the UAE it is supporting the government’s Operation 300bn industrial strategy that aims to increase the sector’s contribution to GDP from the current AED133 billion to AED300 billion by 2031.

As part of the strategy every product made in UAE should comply with the highest international quality standards and will compete in global markets.

Make it in the Emirates was the first campaign of its kind in the UAE to be launched to encourage local and international investors, innovators and developers to benefit from the facilities and incentives offered by the country’s industrial sector.

Schwalje said that in addition to attracting global companies to the UAE there should also be a “focus on supporting the global leadership of homegrown, local champions”. 

He highlighted the success of Al Fakher which has grown into a multi-billion dollar company that exports to over 100 countries and is the largest producer of shisha moassel in the world. 

With an HQ in Dubai and manufacturing facilities in Ajman, Al Fakher has a significant local economic footprint and could become the biggest global consumer shisha brand while preserving an important aspect of the Middle East’s cultural heritage.

Inside the UAE’s Operation 300bn 

• Operation 300bn will support more than 13,500 SMEs by 2031
• The volume of spending on research and development in the industrial sector will increase from AED21 billion to AED57 billion in 2031
• Operation 300bn will focus on industries including space technology, medical supplies and pharmaceuticals, clean and renewable energy, machinery and equipment, rubber and plastic, chemicals, metals, advanced technologies manufacturing, electronics and electrical gadgets and food and beverage
• The strategy pursues four main objectives. The first is to create an attractive business environment for local and international investors in the industrial sector
• The second objective is to catalyse industrial development and stimulate the national economy through launching a programme to enhance in-country value and increase the demand for UAE products
• The third objective is to encourage innovation, and the adoption of advanced technology and Fourth Industrial Revolution solutions
• The fourth is to create strong foundations to enhance the UAE’s position as a leading business and technology hub