ACMA autocomponent park in Gujarat put on backburner

The slowdown in the automotive industry has put the plans for setting up multiple auto-component parks at different locations in Gujarat on the back-burner.

According to a senior official of the Automotive Components Manufacturers' Association of India (ACMA) who did not wish to be identified, while 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. "The overall automotive industry went into a bad spin, and at the moment, no one is really looking at expanding capacity as such. The proposed autocomponent parks are thus in a limbo," said the official on grounds of anonymity. ACMA was basically acting as a facilitator for setting up the parks.

A state government official who is closely associated with development of industrial clusters at these locations said that currently there is no such official proposal from any industry association to set up component parks at these locations. "As such automotive parts makers would make a beeline to these locations owing to projects of Ford, Tata and Maruti; however, unless they have more clarity of potential demand from these plants, capex would be in a slow lane from the ancillary industries," he said.

ACMA official informed that at the moment, the industry is operating on 60-70 per cent capacity utilisation, and no plans of capacity expansion are on the cards, untill demand firms up. For the last three years, passenger vehicle industry has roughly remained in the range of 3.1 million units, with a little plus or minus, the official explained. "Commercial vehicles have actually degrown by around 20 per cent in the last two years, while this year the segment is expecting a 8-9 per cent growth, but they are clearly not even reaching the 2012 numbers. Similar is the situation with two-wheelers( 11-12 per cent average growth) and tractors (cyclical demand)," he said adding that things have not yet reached a state where it would call for investment in additional capacity by component makers. Industry insiders feel that if there is consistent growth in the industry, in the range of 15 per cent, for two consecutive years, it would call for expansion by component manufacturers. "A lot would also depend on the Union Budget, as vehicle sales are hugely dependent on the overall growth in the economy," he said. While there is indeed a positive sentiment, people are in a wait and watch mode before they line up major investments in the sector, feel industry experts.