We are confident components market will touch $40 billion

Written by Yogima Seth | New Delhi | Updated: Sep 4 2009, 06:20am hrs
With India attracting major car manufacturers following its reputation as a hub for small cars, the auto components business is yielding better results in the domestic market as compared to overseas.

Jayant Davar, vice-president of the Automotive Component Manufacturers' Association (Acma), feels the revenue from the domestic market will overtake revenues from export by the end of the automotive mission period (2006-16), as against the earlier estimate of equal business from both markets.

As new players venture into India, we are confident of touching the $40-billion revenue mark from the auto component sector. However, as car and two-wheeler sales are expected to double in the next six years, nearly $26-$27 billion is expected to come from the domestic market and the rest $16-$17 billion would come from exports. This is higher than the earlier estimates of $20-billion revenue from both domestic and export markets, Davar said.

According to Davar, car penetration in the country is as low as eight cars per 1,000 people, against 500 cars per 1,000 people in developed countries and nearly 100 cars per 1,000 people in developing countries. It is expected that the total car population in the country would double by 2015 to nearly four million units.

Lately, India has gained the distinction of 'best cost country' with its low cost, but technologically advanced products and cheap labour. This has led to establishment of 46 original equipment manufacturers (OEMs) in the country in the past three decades.

Of these, 18-19 are car manufacturers, which is the largest number of OEMs anywhere in the world, he said, adding that these OEMs have committed nearly Rs 70,000 crore in India over the next three years in building capacities.

The Indian auto component sector, which is growing at a compound annual growth rate of 19% since 2006, has generated revenue of $16 billion in 2008-09. Of this, nearly 80%, or $12.8 billion, is from sales to domestic OEMs, while 20% or $3.2 billion has come from exports.