The Indian auto-components market contributes almost seven per cent to India’s GDP and employs as many as 19 million people. The auto components sector has been observing robust growth, and turnover is anticipated to reach US$ 200 billion by FY26 from US$ 43.5 billion in FY17. India's exports of auto components could account for as much as 26 per cent of the market by 2021. Growth of the domestic auto components industry is expected to reach 13-15 per cent in FY18 on the back of high growth expectation in domestic passenger vehicles (PV) and two-wheelers (2W) segments.^
Favourable government policies such as Auto Policy 2002, Automotive Mission Plan 2016-2026, 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.
Investments and expansions in the Indian Auto component sector-
- In April 2018, Motherson Sumi Systems signed a deal to acquire Reydel Automotive for US$ 201 million. The acquisition will help the company to enter new geographies and get new customer portfolios.
- Auto components manufacturer Spark Minda has inaugurated a technical centre which will nurture innovation and help the company move towards electrified mobility solutions.
- Global automotive seating leader Adient is planning to open India’s largest-ever auto seating prototyping and testing facility in Pune by 2018.
- Friction materials maker ASK Automotive has signed an agreement with Fras-le of Brazil to set up a joint venture of a brake pads and linings facility for commercial vehicles in Haryana at an investment of over US$ 15.6 million.
- Magna International, Canada's giant auto parts supplier plans to open 3 new plants in India by 2019.
- Automotive Solutions supplier Uno Minda Group is expanding its manufacturing capacity in Gujarat with an investment of US$ 91.87 million.
- Schaeffler India, the Indian arm of Germany’s automotive and industrial parts maker, is planning to invest Rs 300 crore (US$ 46.66 million) per annum over FY18-19.
- Major auto component firms such as Krishna Group, Minda Industries, Lumax Industries, Subros Ltd, etc are planning to invest over US$ 233.31 million over the next 2-3 years.
- Exhaust system and ride control major, Tenneco Automotive India is going to set up a greenfield facility in Gujarat by investing US$ 6-8 million in different phases.
- Sixteen companies are going to set up auto component units in Andhra Pradesh with an investment of US$ 737 million which are expected to create over 6,500 jobs.
- Setco Automotive is going to invest Rs 250 crore (US$ 38.62 million) over the next two to three years for capacity expansion and modernisation.