Auto components sector in Gujarat may see Rs 10-15K cr investments

SME vendors find land prices high to set up manufacturing base in state

With Gujarat all set to become a global automotive hub, its obvious that component manufacturers are betting big on the state, which is expected to attract an investment of around Rs 10,000-15,000 crore from autocomponent suppliers alone in the coming decade.

Speaking at the sidelines of the Automotive Component Manufacturers Association of India (ACMA) buyer-seller meet here in Ahmedabad, Ramesh Suri, president, ACMA said, "Gujarat has been able to attract significant automotive investments. As the vehicle industry in India gradually picks up momentum, it is necessary for the component industry to start preparing itself for the ensuing growth cycle."

Suri felt that given the investments lined up and already made by Original equipment manufacturers (OEMs) including Tata Motors, Maruti Suzuki, Ford India, Hero MotoCorp, Honda Motorcycle and Scooter India, General Motors etc, the overall investment to be made by suppliers in Gujarat would touch Rs 10,000-15,000 crore easily over the coming decade.

"Some suppliers are supplying the OEMs from their current manufacturing locations, be it Pune, NCR or down South. However, as the demand picks up, vendors are bound make investments in Gujarat. When the volumes are assured, parts suppliers would definitely look at being close to the OEM," he explained.

Rough calculations show the Sanand-Hansalpur-Vithalapur belt is likely to have installed annual car manufacturing capacity of 1.46 million vehicles and around three million two-wheelers in the coming three to four years. With planned expansions in place, the figure would touch 2.3 million vehicles annually in the next eight to 10 years.

On the other hand, Vinnie Mehta, secretary general of ACMA pointed out that high land rates were prohibiting smaller parts vendors to set up base in Gujarat. ACMA had a plan to set up a park for component vendors nearbly an existing auto-cluster. As Mehta said, land prices in the vicinity of the OEMs are as high as Rs 1.2 crore and acre at places, and thus it is difficult for smaller vendors to buy land at such high rates. The state government had shown three potential sites, 400 acres at Sanand (near Ahmedabad), 300 acres at Hansalpur (near Mehsana) and 150 acres at Halol (near Vadodara) for setting up component parks, not much movement has taken place in the project.

He, however, also said that once Gujarat picks up more pace as a major automotive manufacturing hub, it would be a welcome step from the state government, if clusters could be developed which have ready infrastructure for smaller players. "Some of the benefits related to land deals to bigger projects could be extended to smaller players as well. May be it can happen in a cluster model, where the area would have basic infrastructure like roads, power, water lines etc, and the rates of the plots would be affordable to the SMEs," he explained.