Auto component industry's total sales grow 12.6% in first half of FY24

Sales jumped by 34.8 per cent Y-o-Y to $33.9 billion

The Indian auto component industry's total sales grew by 12.6 per cent year-on-year (Y-o-Y) to $36.1 billion in the first half of the current fiscal year on the back of strong passenger vehicle (PV) and high-end motorcycles sales, Automotive Component Manufacturers Association of India (ACMA) said on Wednesday.

In the first half of last fiscal year, the auto component industry's sales increased by 34.8 per cent Y-o-Y to $33.9 billion. The growth in H1 of the current fiscal year is lower as industry was recuperating from the pandemic, ACMA Director General Vinnie Mehta told Business Standard.

The auto component exports from India grew by three per cent Y-o-Y to $10.4 billion in H1 of FY24. Similarly, the auto component imports to India increased by four per cent Y-o-Y to $10.6 billion in H1 of FY24.

"Global trade underperformed due to the economic slowdown in European markets, higher inflation rates, and a tentative geopolitical outlook...Exports to South Asia (Bangladesh, Nepal, and Sri Lanka) have declined owing to muted economic activity in the region," Mehta noted, adding that the trade deficit further surged due to the decreasing value of the Indian Rupee against the dollar, he said.

China remained the top country from which India imported auto components. Its share in India's total auto component imports stood at 28 per cent in H1 of FY24.

When asked what has been the trend on imports from China in the last 3-4 years, Mehta replied, "The trend remains very steady. China continues to be the source from where the maximum imports happen. Of late, because of so much focus on electric mobility, and considering the system that China has been able to create for EVs, there has been an increase in imports of batteries and electronics."

The imports could happen for the reasons of technology, price competitiveness, global sourcing strategies of certain companies, he noted.

In FY22, the Indian auto component industry achieved localisation of Rs 18,500 crore. However, in the same year, additional auto part imports of Rs 11,500 crore were done as these components were needed due to Indian government's regulatory actions and shift in consumer preference to EVs and high-end vehicles. 

"However, the net localisation still stood at Rs 7,000 crore. We are very conscious that the localisation has to happen. It is in the interest of the industry. The companies firmly believe in it," Mehta said.

Indian automobile market is also growing very rapidly. Indian passenger vehicles (PV) industry is expected to observe about seven per cent volume sales growth in 2023.

"While we are making all the efforts to localise, the growth has come back very strongly. So that has an impact on imports too. Moreover, there is a shift in consumer preference -- people wanting SUVs, people looking for higher variants in each car model. Also, localisation immediately does not happen after each regulatory change," he replied in response to if the share of imports from China will come down.