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Auto component production likely to rise 12-14% in FY19, says study

The growth of global OEM sourcing from India and the increased indigenisation of global OEMs is turning the country into a preferred designing and manufacturing base

Jayajit Dash  |  Bhubaneswar 

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in 2018-19 is expected to increase by 12-14 per cent in this fiscal year, aided by robust growth in domestic and export markets. Exports of components from the country were valued at $13.5 billion in 2017-18 (FY18). According to the forecast by the Automotive Component Manufacturers Association of India, exports will surge to $80 billion by 2026. The domestic auto components industry expects to register revenues of $200 billion by then. Revenues in the auto components industry have risen at a CAGR of 6.83 per cent, growing from $26.44 billion in 2007-08 to $51.20 billion in FY18.

Domestic original equipment manufacturers (OEMs) contribute 55.97 per cent to the industry’s turnover, followed by exports (26.20 per cent) and domestic aftermarket (17.82 per cent).

A report by the India Brand Equity Foundation (IBEF), a trust established by the Ministry of Commerce, says exports of auto components from the country rose at 11.42 CAGR during 2008-09 and FY18, with the value more than doubling from $5.10 billion to $13.5 billion. Europe accounted for a volume share of 34 per cent during FY18, followed by North America and Asia, with 28 per cent and 25 per cent share, respectively.

The growth of global OEM sourcing from India and the increased indigenisation of global OEMs is turning the country into a preferred designing and manufacturing base. The Indian auto components industry is expected to register a turnover of $100 billion by 2020, backed by strong exports. The auto components industry accounts for 2.3 per cent of the country’s gross domestic product in FY18. During FY18, 3 million people were directly and indirectly engaged by the industry.

The IBEF study expects India to be the fourth-largest producer globally by 2020 after China, the US, and Japan. Also, the auto components industry is expected to become the third-largest by 2025.

The auto components industry is expected to follow OEMs in adoption of electric vehicle (EV) technologies. The global move towards EVs will generate new opportunities for automotive suppliers. The mass conversion to EVs may generate a $300-billion domestic market for EV batteries in India by 2030.

Major global OEMs have made India a component sourcing hub for their operations. Several global tier-I suppliers have also announced plans to increase procurement from their Indian subsidiaries. India is also emerging as a sourcing hub for engine components, with OEMs increasingly setting up engine manufacturing units in the country. For like Ford, Fiat, Suzuki, and General Motors, India has established itself as a global hub for small engines.

First Published: Tue, November 20 2018. 17:36 IST
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