The Auto Expo 2008 will not just be about new launches and new technologies. There will be lot of action in the component sector as well, with around 500 domestic manufacturers and over 400 component manufacturers from China as well as other countries expected to work out business deals during the event.

?For the first time, over 25 international delegates are coming over to India seeking opportunities of not just sourcing components from the country but also of setting up basis in India either in partnership with local players or through a Greenfield facility,? said Vishnu Mathur, executive director, Automotive Component Manufacturers Association (ACMA).

And it’s not just big component manufacturers but also small and medium enterprises that want to make it big at the eight-day long event starting on January 10. ?Over 70% of the total component manufacturers that fall under the small and medium enterprise category are looking at this event to crack business deals that will be spread over the next two years,? said Mathur.

However, the inverted duty structure being followed in India may play a spoilsport. ?While, custom duty on finished products is 0%, it is between 5% and 7.5% on raw material and this is making it unviable for component manufacturers in India to import raw material and sell their end-products which are otherwise available from Thailand at no duty structure,? explained Mathur, added that stronger rupee has made import of component all the more lucrative.

Auto component companies have already unveiled investment plans worth Rs 30,000 crore over the next three years to cash in on the automobile boom. And companies, which are jumping into the bandwagon, include MNCs. While, the world’s leading component company Bosch has committed an investment of Rs 2,650 crore through four subsidiaries in India, Delphi and General Motors have unveiled investment plans worth $2 billion. Daimler Chrysler is already sourcing components worth $200 million euros from the country and the investment is expected to go up in future with the company recently inking a deal with Hero Group for commercial vehicles.

However, Mathur feels that India’s signing of free trade agreements (FTAs) with countries like Thailand, may hit the industry hard. ?High quality infrastructure, easy taxation system and better government policies in Thailand has made it a better investment destination than India,? said Mathur, adding that eventually India will lose out on investment from overseas if government does not come up with investment-friendly policies.

Currently, India exports around 20% or of its total components amounting to $2.9 billion and this is expected to go up to around $20-25 billion or 50% of the total component industry by 2015.