India's two-wheeler exports to see sustained growth in H2 FY22: Ind-Ra

According to the ratings agency Ind-Ra, India's two-wheeler exports will see continued growth in the second half of the next fiscal year after witnessing temporary challenges in the first half of this year due to COVID-19 and reduced crude oil prices, hitting the economies of main export destinations.

In FY21 and FY22, export momentum is expected to continue, mainly driven by the lower penetration level of the exporting countries, demand for use as a commercial fleet, stability in oil prices, lack of public infrastructure and aversion to public transport in the midst of COVID-19, India Ratings and Research said in a statement.

India primarily exports two-wheelers to African, Asian, and Latin American countries, accounting for 37.5%, 22.9% and 21.4%, respectively, in the first half of FY21, it said.

"Within this, Nigeria, Colombia, Nepal, Bangladesh, and Philippines together accounted for around 50% of the total exports in FY20 (in terms of value)," the credit rating agency said.

On the back of their strong competitive position and efficient distribution network, it added, Indian original equipment manufacturers (OEMs) will continue to gain momentum for their main offerings.

Indian two-wheeler manufacturers such as Bajaj Auto and TVS Motor Co will benefit from their export-focused business model, with exports accounting for almost 49% and 26% of their total sales volume, respectively, in the first half of FY21, it said.

Indian OEMs, however, face tough competition, particularly from Japanese OEMs who have a large market share worldwide. While Chinese OEMs have a greater market share in global markets than Indian OEMs, the competition is uneven and the quality of Indian OEMs is superior, the agency noted.

Ind-Ra said it expects the decrease in two-wheeler (2W) exports for FY21 to be 18-21% in line with that of the domestic industry.

"Since 2W exports only account for 16-18% of the total 2W sales for Indian OEMs, this is not considerable enough to compensate for the domestic volumes during the same period," it added.

In FY22, the ratings agency said, 2W export volumes are likely to increase by mid-teen.

In the first quarter of FY21, the industry encountered temporary setbacks due to the spread of COVID-19 and the weakening of crude oil prices, affecting the economies of India's major export destinations.

This coupled with the nationwide lockdown, supply-chain and logistics disruptions impacted export sales significantly. This combined with the national lockdown, supply chain and logistics disruptions, significantly affected export sales.

Since then, 2W exports from India have shifted in line with domestic market growth, it added.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.