India is emerging as a global hub for auto component sourcing. Domestic auto component demand expected to rise to US$ 113 billion in 2020 from US$ 26 billion in 2011.
Capital investments in the industry have risen from US$ 3.8 billion in FY05 to US$ 12 billion in FY11 – a compound annual growth rate (CAGR) of 21 per cent. Export of auto components from India increased at a CAGR of 17 per cent over FY05-FY10.
Major global OEMs are planning to make India a component sourcing hub for their global operations. Several global Tier-I suppliers have also announced their plans to increase procurement from their Indian subsidiaries. India is also emerging as a sourcing hub for engine components, with OEMs increasingly setting up engine manufacturing units in the country.
Europe accounts for 40 per cent of total exports, while Asia and North America account for 24 per cent and 23 per cent respectively. Excise duty on small cars has also been reduced.
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