The Indian auto component industry is expected to reach a turnover worth US$ 113 billion by 2020-21 from US$ 43.4 billion in 2011-12, according to Automotive Component Manufactures' Association (ACMA) report titled, 'Auto Component Industry in India: Growing Capabilities & Strengths'. The exports from the industry are expected to grow at a compound annual growth rate (CAGR) of 17 per cent during 2012-21, the ACMA report highlighted.
The small and medium enterprise (SME) dominated automotive sector is among the top three sectors attracting heavy online traffic on the site, IndiaMART.com, in terms of the number of buyers who visited from other countries, both developed and developing, as per a report by IndiaMART.com. In addition, among the Indian suppliers registered on IndiaMART.com, the auto component sector features in the top five categories, contributing 11.8 per cent to the whole segment. Product categories such as pumps and pumping equipments took the top position with 8.1 per cent buy leads posted, followed by products such as nuts and bolts, and lights and accessories in second and third position, respectively.
"India is a growing market for us and we are pleased to partner with Uno Minda to bring best practices to Indian original equipment manufacturers (OEMs) and to explore and expand the markets within Asia," as per Mr S M Park, President, AMS.
The tyre production in India is anticipated to reach 191 million units by the end of 2015-16, according to RNCOS research report titled, 'Indian Tyre Industry Forecast to 2015'. Moreover, manufacturers are expected to invest huge amount into the industry over the next few years, with a major proportion of this investment directed towards the radial tyre capacity expansion.
In an analysis of medium to heavy-duty Hybrid and Electric Commercial Vehicle Market in China and India, Frost and Sullivan estimated that the component revenues from India will reach US$ 212 million by 2020, which would account for 11 per cent of the global component market.
The vision of Automotive Mission Plan (AMP 2006-16) aims India to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion accounting for more than 10 per cent of the gross domestic product (GDP) and to provide additional employment to 25 million people by 2016.
The amount of cumulative foreign direct investment (FDI) inflow into the automobile industry during April 2000 to November 2012 was worth US$ 7,518 million, amounting to 4 per cent of the total FDI inflows (in terms of US$), as per data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce.
The Indian automobile and auto components industry can be expected to surpass China's growth path by 2021, according to a research report by Espirito Santo Securities.
Supportive government policies, positive business environment, availability of reasonably priced talented workforce and stable outlook for the industry has made India a global hub for the international manufacturers to set up their facilities in the country. The auto components manufacturers are also reaping the benefits.
The Government of India's (GoI) recent electric vehicle (EV) policy calls for a plan worth Rs 23,000 crore (US$ 4.26 billion), to promote the production of electric and hybrid vehicles over the next eight years, and set a sales target of 6 million units by 2020.
In a bid to improve safety features of vehicles, the Government has asked automobile manufacturers to develop a gadget which would be similar to the 'black box' installed in planes. The owner would not be able to turn the instrument off or on and the snapshot could be viewed by legal bodies, insurance companies and automakers. Moreover, Mr C P Joshi, Minister of Road Transport and Highways, Government of India, has also asked manufacturers to contemplate on the option of fixing such IT-enabled instrument to improve safety and security of the vehicles.
Furthermore, the thrust given by the Government to the automotive sector in the last supplement of the Foreign Trade Policy (FTP) is truly commendable. Twenty three new items were included under the Market Linked Focus Product Scheme (MLFPS) and another five new items were introduced under the Focus Product Scheme (FPS), according to Mr Vinnie Mehta, Executive Director, ACMA.
The India tyre industry has been witnessing stupendous growth on back of increased demand in automobiles, especially in passenger vehicles and two-wheeler segments, besides giving impetus to the automobile OEM sector and replacement market.
The rapid improvement in infrastructure, huge domestic market, increasing purchasing power, established financial market etc have made India a favourable destination for investment by global majors in the auto industry, according to AMP 2006-2016.
In addition, the hybrid and electronic vehicles are new developments on the automobile canvas and India is one of the key markets for them. Global and Indian manufacturers are focussing their efforts to develop innovative products, technologies and supply chains.
Exchange Rate Used: INR 1 = US$ 0.01854 as on January 27, 2012
References: Media Reports, Press Releases, Automotive Component Manufacturers Association of India (ACMA), RNCOS, Automotive Mission Plan (AMP 2006-16)