Last Updated: April 15, 2020
Last Updated: March, 2020
The Indian auto-components industry has experienced healthy growth over the last few years. The auto-component industry of India has expanded by 10.6 per cent to reach at a level of US$ 56.2 billion in FY19.
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.
India’s exports of auto components increased at a CAGR of 8.34 per cent, during FY14-FY19, with the value of auto component exports increasing from US$ 10.16 billion in FY14 to US$ 15.17 billion in FY19. This has been driven by strong growth in the domestic market and increasing globalisation (including exports) of several Indian suppliers. Growth is further expected to accelerate to 8-10 per cent in FY19 due to pick up in global scenario. ** Turnover of the aftermarket has increased at a CAGR of 11.35 per cent from US$ 5.90 billion in FY14 to US$ 10.10 billion in FY19 and expected to reach US$ 32 billion by 2026. Turnover of automotive component industry stood at Rs 1.79 lakh crore (US$ 25.61 billion) in FY20 (April-Sept 2019). During April-September 2019, exports of auto components grew by 2.7 per cent to Rs 51,397 crore (US$ 7.35 billion).
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.
The Foreign Direct Investment (FDI) inflows into the Indian automotive* industry during the period April 2000–December 2019 were recorded at US$ 23.89 billion, as per data by the Department for Promotion of Industry and Internal Trade (DPIIT).
Some of the recent investments made/planned in the Indian auto components sector are as follows:
Following are the achievements of the government in the past four years:
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 $74 billion.
As per the Union Budget 2019-20, government moved GST council to lower the GST rate on electric vehicles from 12 per cent to 5 per cent. Also, to make electric vehicle affordable to consumers, our government will provide additional income tax deduction of Rs 1.5 lakh (US$ 2,115) on the interest paid on loans taken to purchase electric vehicles.
Government has come out with Automotive Mission Plan (AMP) 2016-26 which will help the automotive 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.
National Electric Mobility Mission Plan aims at achieving sales of 6-7 million units of hybrid and electric vehicles by 2020. As per Automobile Component Manufacturers Association (ACMA) forecasts, automobile component exports from India are expected to reach US$ 80 billion by 2026
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 US$ 30 billion by 2021E.
Note: Conversion rate used as on January 2020, Re 1 = US$ 0.01402
Notes: ** As per CRISIL Research, * - Includes automobile and auto-components, E – Estimated, SAMARTH - Smart & Advanced Manufacturing and Rapid Transformation Hub
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Last Updated: April 15, 2020
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