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Indian Auto Components Industry Analysis

October, 2014

India is projected to become the fourth largest automobile producer globally by 2020. The auto components sector recently has been observing robust growth, and turnover is anticipated to reach US$ 115 billion by FY21 from US$ 40.6 billion in FY13.

India's exports of auto components increased at a compound annual growth rate (CAGR) of 19.6 per cent to US$ 9.3 billion in the period FY08-13. The domestic auto component market is expected to account for 74 per cent of total sales by 2021 with a total market size of US$ 85 billion. Also, 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) as well as concessions provided on excise duties in the Union Budget 2014-15, have helped the Indian auto components industry achieve considerable growth.

India is all set to become a global outsourcing hub with several foreign players such as Honda, Ford, etc., planning to invest in the country. This will significantly help the auto components sector to grow and it is estimated to contribute as much as 3.6 per cent to India's gross domestic product (GDP) by 2020 from 2.1 per cent in 2009.

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