India Now - page 35

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APRIL-MAY 2015
A U T O COM P O N E N T
S EC TORAL UPDAT E
An Essential Component
From local vendor partners of OEMs to explorers of distant
export markets, India’s auto component players have come
a long way.
BY SANJAY K OJHA
AUTO COMPONENT
A
utomobile manufactur-
ers across the world have
grown bullish on India
over the years. With
abundant availability of
high quality workforce at competitive
costs and geographical proximity to
ASEAN, Japan, Korean and European
countries, foreign automobile manu-
facturers want to make India as their
export hub. According to a report pub-
lished by Deloitte, India is expected to
become a major automobile manufac-
turing hub and the third largest market
for automobiles by 2020.
This surge in the Indian automotive
market with deep forward and back-
ward linkages is set to translate into
high velocity growth in the Indian auto-
motive component sector as well. As
per a report by Automotive Component
Manufacturers Association of India
(ACMA), the auto component industry
can emerge as a key engine of India’s
economic and manufacturing growth,
contributing 3.6 per cent of GDP by
2020, up from the current level of 2.2
per cent. According to a report by the
Confederation of Indian Industry (CII),
the Indian auto component industry is
set to become the third largest in the
world by 2025.
A Sector is Born
The New Industrial Policy of 1991,
followed by Auto Policy, 2002, provided
an enabling environment to the auto
component industry to induct new
technologies and produce high quality
competent products. “Several Indian
auto ancillaries who were initially
developed as local vendors for global
automotive original equipment
manufacturers (OEMs) have also
started supplying to the OEMs’ overseas
plants, resulting in rising export
share. Further, various acquisitions by
domestic auto ancillaries have resulted
in new customer additions supporting
export growth,” says Subrata Ray,
Senior Group Vice President, ICRA.
India is now a supplier of automobile
components to global players such
as General Motors, Toyota, Ford
and Volkswagen, amongst others.
Europe accounted for 38 per cent of
exports followed by Asia at 25 per cent
and North America at 21 per cent,
says ACMA annual report 2013-14.
While exports to Europe increased
by 14.5 per cent in 2013-14 over the
corresponding previous fiscal, exports
to Latin America and Asia registered
a growth of 16.5 per cent and 5.4 per
cent respectively against 2012-13. As
per the report, drive train, engine and
electrical parts have mainly driven the
growth of auto components’ exports.
The report sees India as a global hub
for small engines, with its increased
manufacturing in the country for
export purpose. According to ACMA,
there is potential to export components
worth US$ 20 billion to China, with the
real ‘addressable opportunity’ pegged
at US$ 7.5 billion. India exported
auto parts worth US$ 314 million in
2013-14, recording triple growth in
past four years from US$ 103 million
in 2009-10. ACMA Automechanika
New Delhi 2015, held in February, saw
participation from over 200 Chinese
companies, many of whom evinced
their interest in importing Indian
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