According to Reuters, General Motors Co began initial production of its first ever Chinese-designed car for the Indian market recently, a major step for the U.S. automaker as it tries to scale up in a market where foreign companies have struggled.

India’s love for the small car and its highly competitive, price-sensitive market have confounded many of the world’s major automakers.  The compact Sail, sold as a sedan and hatchback, will go on sale soon as the first model designed by GM’s Chinese partner SAIC Motor Corporation.

“Sail is in some ways perhaps the first vehicle designed with primarily Asian customer requirements.” GM India’s Lowell Paddock said. SAIC holds a 50 percent stake in the India unit.  A larger passenger van from SAIC’s stable will begin production in India by the end of 2012.

What this means

It is yet unclear whether a China product can translate into the India market.  India’s largest carmaker, Suzuki, has largely designed products directly for India. But it will be interesting to watch what happens here, since Automotive product design is so expensive, it makes sense to leverage similar knowledge.

Ford Motor Company’s India operation  said that its sales in India tripled in February compared with the same month a year ago. For the month, Ford sold 9,293 cars in India compared with 3,223 last February.

Ford India's Newly Released "Figo" Model

Both Ford and General Motors are doing very well in India lately.

Takeaway: If you take the time to understand the pulse of the India consumer, you will be rewarded handsomely even in the light of local, Korean, and Japanese competition.

German automaker Daimler AG plans to buy more components from India for its global operations and expects growing demand for luxury cars to drive sales higher in India Chief financial officer, Uwe Jarosch, said recently. “Currently, our sourcing from India is €40 million to €50 million.”

Mr. Jarosch said the company is in talks with Indian vendors to contribute to a new global platform, Mercedes Front-wheel Architecture,  for passenger vehicles, including  hatchbacks and compact sport-utility vehicles.

General Motors said last Thursday that it planned to source $1 billion worth of auto parts from India over the next two years.  Indian parts makers are exporting batteries, alternators, fuel tanks, forgings and more to markets in Europe, North America and elsewhere.

This is an indication of the prowess of Indian manufacturing, built on the back of the domestic automobile industry.

The Economic Times carries a nice piece by Karl Slym currently CEO of General Motors India, who first came as a visitor the country and now lives there as an expatriate.

“Coming (to India) as a visitor and as a resident are two completely different things. I enjoy the life here and feel every bit a part of it, so much so, that I actually find myself very protective about the country.”

Click here for the full story.  “There are definitely specific differences about doing business in India, but nothing that can’t be managed with a little adjustment. Like in Japan, India likes to start a little later but also stay till later at the other end of the day. In the UK, people usually go to work earlier and leave earlier for family time, or to go out for dinner. They keep that time for themselves. Here, the same time is morning. One area I have noticed while doing business here is a lack of pre-planning for events. With the confidence of finishing stuff in the last minute, people here are naturally disinclined to plan much ahead. ”

In writing my book on Doing Business in 21st Century India, I spoke to dozens of Americans who became Indo-philes after spending a years in the country.  Slym’s experience is typical of those who can survive the first year and keep smiling!