India will become the next auto ancillary hub in Asia by 2020, says an Edelweiss Financial Services research report. Currently pegged at $38 billion, this industry is estimated to post a CAGR of 17% to $115 billion by FY21, it says. Exports, which currently contribute 17% to the auto component industry, is expected to increase to 26% by then.
Original Equipment Manufacturers or OEMs’ drive to source from a few players has engineered a paradigm shift in the industry. Indian OEMs are actively looking to reduce suppliers over the next 4-5 years. The profitability of Indian auto component companies have steadily improved over the last decade, the study said.
International revenues now contribute 51% to Indian auto component companies compared to 12% in 2002. Indian companies are now truly global. Based on the responses from 30 top auto component manufacturers from across the country, it is expected that India is touted to be the next auto ancillary hub globally by 2020, it pointed out.
Vinay Khattar, associate director & head of retail research, Edelweiss, said, “The Indian auto component industry is going through a huge trend shift. Pegged at $38 billion, this sector is estimated to post a 17% CAGR to $115 billion by FY21. The auto component exports currently contribute around 17% ($7 billion) to the overall industry. Spurred by the availability of skilled manpower and technological competence, most Indian players are now graduating from being component suppliers to system or module suppliers, they are also in turn, gaining significant muscle, portending humungous opportunity for Indian auto component suppliers.”
By R Ravichandran