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Indian Auto Components Industry Analysis

November, 2016

The Indian automobile market is estimated to become the third largest in the world by 2016 and will account for more than 5 per cent of the global vehicle sales. The auto components sector has been observing robust growth, and turnover is anticipated to reach US$ 115 billion by FY21 from US$ 35.1 billion in FY14.

India's exports of auto components increased at a compound annual growth rate (CAGR) of 15 per cent to US$ 10.2 billion in the period FY09-14. Europe accounts for the largest share of Indian auto components exports (38.1 percent) followed by North America (21 per cent) and Asia (25 per cent). Exports could account for as much as 26 per cent of the market by 2021.

Favourable government policies such as Auto Policy 2002, Automotive Mission Plan 2006-2016, National Automotive Testing and R&D Infrastructure Projects (NATRiPs), have helped the Indian auto components industry achieve considerable growth.

India is emerging as global hub for auto component sourcing. A cost-effective manufacturing base keeps costs lower by 10-25 per cent relative to operations in Europe and Latin America. Relative to competitors, India is geographically closer to key automotive markets like the Middle East and Europe. Global auto component players are increasingly adopting a dual-shore manufacturing model, using overseas facilities to manufacture few types of components and Indian facilities to manufacture the others.

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