Last Updated: July 03, 2018
Last Updated: June, 2018
The Indian auto-components industry has experienced healthy growth over the last few years. Some of the factors attributable to this include: a buoyant end-user market, improved consumer sentiment and return of adequate liquidity in the financial system. The auto-component industry of India has expanded by 14.3 per cent because of strong growth in the after-market sales to reach at a level of Rs 2.92 lakh crore (US$ 43.55 billion) in FY 2016-17. The industry is further expected to grow to US$ 47-49 billion in FY18.
The auto-components industry accounts for 2.3 per cent of India’s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly each. A stable government framework, increased purchasing power, large domestic market, and an ever increasing development in infrastructure have made India a favourable destination for investment.
The Indian auto-components industry can be broadly classified into the organised and unorganised sectors. The organised sector caters to the Original Equipment Manufacturers (OEMs) and consists of high-value precision instruments while the unorganised sector comprises low-valued products and caters mostly to the aftermarket category.
The total value of India’s automotive exports stood at Rs 73,128 crore (US$ 10.9 billion) in 2016-17 as compared Rs 70,916 crore ($10.8 billion) in the year 2015-16. This has been driven by strong growth in the domestic market and increasing globalisation (including exports) of several Indian suppliers. Auto-component exports from India are expected to grow 7-9 per cent in FY18, backed by stronger global growth and higher exports to emerging nations. Growth is further expected to accelerate to 8-10 per cent in FY19 due to pick up in global scenario.&
The Indian automotive aftermarket is expected to reach Rs 75,705 crore (US$ 13 billion) by the year 2019-20, according to the Automotive Component Manufacturers Association of India (ACMA). These estimates are in sync with the targets of the Automotive Mission Plan (AMP) 2016-26.
According to the Automotive Component Manufacturers Association of India (ACMA), the Indian auto-components industry is expected to register a turnover of US$ 100 billion by 2020 backed by strong exports ranging between US$ 80- US$ 100 billion by 2026, from the current US$ 11.2 billion.
The Foreign Direct Investment (FDI) inflows into the Indian automobile industry during the period April 2000 – December 2017 were recorded at US$ 18.41 billion, as per data by the Department of Industrial Policy and Promotion (DIPP).
Some of the recent investments made/planned in the Indian auto components sector are as follows:
The Government of India’s Automotive Mission Plan (AMP) 2006–2016 has come a long way in ensuring growth for the sector. Indian Automobile industry is expected to achieve a turnover of $300 billion by the year 2026 and will grow at a rate of CAGR 15 per cent from its current revenue of $74 billion.
Government has drafted Automotive Mission Plan (AMP) 2016-26 which will help the automobile industry to grow and will benefit Indian economy in the following ways:-
The rapidly globalising world is opening up newer avenues for the transportation industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe and reliable modes of transportation. Over the next decade, this will lead to newer verticals and opportunities for auto-component manufacturers, who would need to adapt to the change via systematic research and development.
The Indian auto-components industry is set to become the third largest in the world by 2025 Indian auto-component makers are well positioned to benefit from the globalisation of the sector as exports potential could be increased by up to four times to US$ 40 billion by 2020.
Exchange Rate Used: INR 1 = US$ 0.016 as of FY2018
Notes: &As per CRISIL Research
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Last Updated: July 03, 2018
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