Based on the reports of Automotive Component Manufacturers Association of India (ACMA), the turnover of auto component report was estimated at over US$ 18 billion in 2007-08, an increase of 27.2 per cent since 2002. It is likely to touch US$ 40 billion by 2015-16.
Export of the auto components is growing at the rate of 35 percent during 2002 - 2007. It is expected to reach around US$ 20 billion-US$ 22 billion by 2015-16. A majority of Indian exports are sent to Europe and North America.
Although, global recession has adversely affected Indian auto component industry, it is now coming back on the track. The auto component industry in Kanpur has witnessed a manifold increase in the orders.
Global automobile manufacturers see India as the hub for automotive components. This has resulted in rapid increase in the demand and value of components due to:
- Cost competitiveness in terms of labour and raw material
- Established manufacturing base
Manufacturers from luxury car segment look forward to make India a sourcing hub for components, besides using more local components in cars for the Indian market. Automotive giants such as BMW, Skoda and Mercedes Benz have entered into a direct sourcing deal with the local vendors in the country.
Government has taken several initiatives to promote foreign direct investment (FDI) in the industry.
Some of the policies are as follows:
- Automatic approval for foreign equity investment up to 100 per cent of manufacture of automobiles and components is permitted.
- The automobile industry has been delicensed.
- There are no restraints on import of components.
Even though India's auto component industry has conventionally relied on export to generate profits, the domestic market is itself full of opportunities. Industry experts are hopeful that the country will be able to outperform China and other Southeast Asian countries in the segment. With investment of around US$ 15 billion slated for the sector over the next few years, the prospects for India's auto market are bright.