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Auto component firms eye higher exports, low imports to become self-reliant

Top official at various auto component firms said exports, which anyways have been intrinsic to the overall strategy, will increase at a rapid pace over the next two to five years

Topics
Auto component makers | Auto component export | automobile industry

Shally Seth Mohile  |  Mumbai 

The industry estimates nearly 2 per cent of the components in a passenger car are from China and without those parts cars will not be rolled out from the manufacturing lines
Firms say they will continue to import high volume, low value parts as making them in India is financially unviable given the high logistics and power costs

are looking to shore up exports and cut down on imports as they seek to reduce vulnerability to currency swings and become self-reliant.

Top executives at various auto component firms said exports, which have been intrinsic to the overall strategy, will likely increase at a rapid pace over 2-5 years. These firms, however, will continue to import high volume, low-value parts, as making them in India is financially unviable given higher logistics and power costs.

F R Singhvi, joint managing director at Bengaluru-based Sansera Engineering, said his firm a manufacturer and supplier of critical engine parts, is looking to increase the share of exports in its revenue to a third by FY22, from the current 28 per cent.

“Being atmanirbhar means higher exports and less imports. You cannot make everything in India as it’s not viable,” said Singhvi. High volume, low-value parts — which can be sourced from countries like China at a cost which is significantly less than in India — will always be imported as India cannot match the scale and costs of that country, he pointed out, citing an example of alloy wheels, which are imported by automakers in large numbers.

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“We would rather focus on developing know-how of local production of technology-intensive parts that are in high demand in both domestic and global markets,” said Singhvi.

The plans to accelerate local procurement and boost exports come amid Prime Minister Narendra Modi's clarion call for Atmanirbhar Bharat. It is also being fuelled by the geopolitical tensions with China, which has been one of the key sources for imports for manufacturers across several sectors.

India’s auto component industry imported parts worth Rs 1.09 trillion in FY20, against Rs 1.23 trillion a year ago. It constituted 31.2 per cent of the turnover, according to Auto Component Manufacturers Association (Acma). Exports for the same period stood at Rs 1.02 trillion, against Rs 1.06 trillion a year ago, accounting for 29.4 per cent of the turnover.

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Ashok Taneja, president and MD at Shriram Pistons & Rings, says the company has been working towards becoming self-reliant for a while now.

At the crux of the strategy is to become a “globally competitive supplier and a supplier of choice for the OEMs (original equipment manufacturers) globally.” His firm that currently gets a fourth of its revenue from exports is looking at increasing it to 30 per cent in the next three years.

Shriram Pistons & Rings, he said, has been working towards achieving sustainable cost competitiveness. A sharper focus on R&D, design, development, and testing has helped the firm generate intellectual property rights (IPR).

India may expand its share in the global auto component trade to 4-5 per cent by 2026, emphasising a targeted export expansion and import substitution programme for key components, McKinsey said.

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First Published: Tue, September 08 2020. 21:38 IST