Indian auto component makers bet big on Iran

In anticipation of a market expansion following the lifting of sanctions, Indian component makers have lapped up all the space available to them at the Iran automobile parts fair slated for November. Twenty-five component makers have booked space quickly, making it a full house, with some companies unable to find space.

“The Iran deal happened this week, but there was anticipation that there would be a breakthrough because talks were on. The auto industry in Iran and the aftermarket was not showing growth for the last couple of years due to low movement of goods.  Once sanctions are lifted, original equipment manufacturers from markets like Europe will rush to Iran. India already enjoys an image of a quality supplier with such companies. We hope to expand exports,” said Rajinder Kakroo, general manager in charge of exports at Shriram Pistons.

The industry, led by the Automotive Component Manufacturers’ Association (ACMA), will be participating in the annual Iran International Auto Parts Fair (November 16-19) after a gap of three years. Compared to the normal space of 100 sqm, ACMA opted for 250 sq m this year, said a person familiar with the development. India had a prominent space in the Tehran event, next to the German pavilion, he said.

“ACMA informed the members about the allotted space at the end of June. Everything has been booked. More companies were keen to participate but they could not book space,” he said.

New participants include Bharat Forge and N K Minda Group. Regular participants are Shriram Pistons, Anand Group and Talbros.

Iran, the biggest automobile market in West Asia, imported components worth $102 million from India in the year ended March, up 69 per cent from the previous year. India exports pistons, engine parts, bearings, forgings and rubber products to Iran, mainly to service the aftermarket. Some exports are also done for manufacturers.

Indian exports to Iran had received a setback in 2011 following the US sanctions that made the payment mechanism in dollar and euro difficult. Importers were opening rupee letters of credit as UCO Bank set up a payment mechanism for Iranian banks. Exports declined from $76.5 million in FY11 to $55 million in FY13. Indian firms also stopped attending the Tehran fair. Component makers from China and Turkey expanded their presence during the sanctions, said an industry executive.

With this week’s development in Iran that could settle the country’s long-term problems related to its nuclear programme, sanctions could be lifted. Industry officials said the lifting of sanctions would help companies to export smoothly to Iran

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.