ZF to make India as its global sourcing hub

Aims to triple its sourcing from India to 100 million Euros

After witnessing a slowdown in the last few years, there are signs of revival for Indian auto-component industry. German auto component and service major ZF will reinforce its supplier base in the Indian market. The company aims to to reach 100 million euros worth of export from India by 2017. This was announced on the occasion of the ZF India Supplier Day. At present, ZF is exporting to the tune of 35 million euros from India. To achieve this goal, ZF has initiated the campaign “Wind of Change”.

“We want to develop India to a global sourcing hub for ZF. India has always had an advantage of a good supplier base, technical capability and availability of skilled talent proving it to be a premier destination for sourcing,” said Wilhelm Rehm, board member, ZF Friedrichshafen AG and responsible for Corporate Materials Management.

As part of this drive, ZF India has set up a global purchasing office in the Chakan plant. This will help local commodity managers engage in deeper interactions with the supplier base. In turn, suppliers will have a window to understand a global organisation offering multi-product opportunities.

“India has always had an advantage of a good supplier base, technical capability and availability of skilled talent proving it to a premier destination for sourcing. We have been present here for over three decades and aim to position India as a major sourcing hub which can further help our presence on a global scale. Currently, ZF is exporting to the tune of 35 million euros from India and aims to increase this figure to 100 million euros by 2017," said Suresh K V, president for ZF in India.

ZF's local sourcing team will also function as a regional commodity office, allowing ZF to develop a quality portfolio of products for the Indian and overseas markets.

However, the auto component sector could gain momentum and register growth of 8-10% in the coming financial year, rating agency ICRA said. In FY16, industry has registered a growth of 7.2% y-o-y vis-a-vis a decline of 3.9% in FY15.

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 $40 billion by 2020.

The total turnover of the industry, including domestic sales, grew 1.3% to $39 billion in FY16. Export accounts for one-third of the turnover. India is a net importer of auto components and imports grew 1.8% to $13.8 billion in FY16.