Autocomp R&D spend less than 1% of current turnover: Sunjay Kapur

Sunjay Kapur talks about how more needs to be done in research, but investments also need a large market size

As the focus on circularity and sustainability increases, are Indian automobile component (autocomp) makers investing more in research? SUNJAY KAPUR, president of Automotive Component Manufacturers Association of India and chairman of Sona Comstar, in an interview with Sohini Das, sheds light on how more needs to be done in research, but investments need a large market size as well. Edited excerpts:

Are Indian autocomp makers investing in ‘green’ components?
 

The trend toward green sourcing, green energy, and green buildings is becoming increasingly mainstream. Recycling is a form of ‘green’ as well, and it’s all moving towards the broader theme of sustainability. The industry is not just focusing on pricing but also on creating globally competitive, sustainable products. This involves investments in research and development (R&D), among other things. It is crucial for component manufacturers to view sustainability as an integral part of becoming more competitive.

What is the current state of R&D investment in the Indian autocomp sector?
 

The industry average slightly less than 1 per cent of its sales in R&D. While some companies are investing more, many are hovering around the 0.5 per cent mark. We have not reached the stage we need to. Talks are ongoing to enhance localisation and technology investments. To increase exports, one has to invest in technology. Domestic original equipment manufacturers are also raising the bar in terms of the products they offer, necessitating more technological investment from component manufacturers.

What is the export growth outlook for 2023-24 (FY24)?
 

Last financial year, exports grew by approximately 5.2 per cent. This year (FY24), we anticipate an export growth rate north of 5 per cent. New technological investments require larger market sizes. The West’s focus on electrification offers a larger market than what is currently available in India. Companies focused on exports are growing by design, not by default.

Why would we not play in a 20 million vehicle global market? North America is our largest export market, followed by the European Union, accounting for nearly 30 per cent of our $20 billion exports. The domestic industry is also flourishing, with a 33 per cent year-on-year growth in autocomp industry turnover for 2022-23.

How is the China Plus One strategy benefiting Indian component manufacturers?
 

The China Plus One strategy is turning out to be favourable for us, increasing our exports and attracting new investments into India. This is a gradual process, and not an overnight one.

We’re collaborating with several international purchase offices and pushing companies to focus on exports. In addition to North America, Africa, West Asia, and South America serve as big markets for us.