India can tap component outsourcing mkt: PWC

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New Delhi, Sep 3: From 503 models in 2007 to an estimated 644 car models in 2015, there lies a huge opportunity for India and other low cost countries (LCCs) to tap the multi-billion dollar global component outsourcing market, says PwC while making a presentation at the 48 th Annual General Session of the Automotive Component Manufacturers Association (Acma).

“The cost competitiveness that India and BRIC nations like China and Brazil offer has resulted in two major changes in the global automobile industry. On the one hand there has been relocation of manufacturing facilities to LCCs to manufacture more value-added products at lower rates vis-à-vis developed countries and on the other hand, lately, even R&D is gradually shifting to these countries,” says John Hadley, partner, Price Waterhouse Coopers–Automotive Practice, adding that the emerging markets are expected to contribute 49% to the total global auto component industry which is pegged at $25 billion.

“India has still not reached the stage where we can design products on our own without assistance from our foreign counterparts due to lack of strong design capabilities. This is largely due to low expenditure of just 1.65% of the total revenue that goes into R&D vis-à-vis 7% in Japan,” says RC Bhargava, chairman, Maruti Suzuki India. “Since engineering resources are very expensive in Europe and other developed countries and are not available at short notice, it is an opportunity for India to develop design capabilities that will reduce the time cycle in an economy where the product life cycle is shrinking,” he added.

According to Sanjay Labroo, president, Acma, the slump in industry due to high interest rates and high inflation has given us an opportunity to invest in improving efficiency and developing design capabilities.