"The response to our initiative to take a delegation of auto component manufacturers for seeking technology and know-how tie-ups has been overwhelming," Indo-German Chamber of Commerce, regional director, AP Singha, said.

IGCC is organising a high-level delegation of auto component manufacturers to Germany and the Czech Republic from September 20 to 26 next.

Singha cites demand projections to drive home the point that it is vital that Indian component manufacturers update know-how and technology to maintain the competitive edge and meet international quality standards, demanded by leading world car makers.

The demand for passenger cars is expected to grow from the present level of 4,00,000 units to 7,00,000 units in the next two years. The size of thecomponent industry will correspondingly grow to reach US $ 10 billion.Indian auto component industry has the potential of becoming the O.E.M. supplier to the leading world car manufacturers. Indian subsidiaries of giants like Daewoo and General Motors have already started sourcing components from India.

Significantly, automobile and auto ancillaries manufacturing sectors together contributed 26 per cent of the total inflow of foreign direct investment into India between January and March 1999. Indian auto component exports today stand around Rs 900 crore, mainly in the category of spares, not OEM equipment.

According to Singha, Germany, the largest car producer in the world, has invested heavily in the Indian auto component sector. As many as 68 collaborations out of the total of 313 in the auto component sector are of German origin. Simultaneously, Germany's auto components exports to India have increased substantially to DM 263 million in 1997. Imports from India stood at DM 193 million in 1997.

Thegradual globalisation and the entry of world leaders like Daimler-Chrysler, General Motors, Ford, Toyota and Hondo is transforming the auto component sector from a traditional low volume business to a high-tech, high volume world class industry.

A recent study by Ernst and Young has concluded that the automotive component industry has to explore the possibilities of expanding volumes and market share through mergers and acquisitions as well as joint ventures. This is expected to not only provide faster access to market share but would provide fair valuation and and exit opportunity for companies not performing well.

Singha said that IGCC has organised factory visits and one-to-one meetings for the delegation with leading German and Czech car makers as well as component units for facilitating transfer of technology and joint venture agreements.