The Indian automotive components industry is riding the auto demand revival wave. According to ACMA (Automotive Components Manufacturers Association), despite the slowdown in global markets, the Indian component industry clocked a steady growth momentum backed by uptick in retail sales, especially for passenger vehicles as well as strong CAPEX cycles kicking off.
The component industry reported revenue of Rs 2.65 lakh crore, up 34.8 percent YoY in H1 FY2023. An interesting aspect pointed out by Vinnie Mehta, Director General, ACMA was that the share of electrical and electronics components in the overall mix grew from 11 percent to 14 percent, while engine components came down to 18 percent from 20 percent and engine transmission dipped to 38 percent from 34 percent. This indicates that there was an increasing focus on new technologies and green mobility driving the change.
Sunjay Kapur, President, ACMA was optimistic too, “We are seeing a robust economy, the macro is looking good; GDP growth for investment looks promising. In the automotive industry, the passenger and commercial vehicle sales has grown, and despite the initial hiccup, the two-wheeler retails picked up during the festive season. We are also seeing lot of new CAPEX investments in electric vehicles and technologies.”
He further mentioned that the components industry sees CAPEX cycle to production follow a 18-month period, “While there is still reliance on import of electric and electronics components, the push towards localisation will further help improve trade balance.”
Adding to that Mehta said, a couple of years back, ACMA along with McKinsey came out with a report on the roadmap to reduce imports and increase exports. “At that time the auto components import came at $20 billion (Rs 164,940 crore), and in the next 2-3 years the target was to reduce that by at least 2-3 percent, we are now revisiting that to find out how much we have progressed.”
Contract manufacturing a sunrise opportunity
India’s manufacturing segment is seeing a shift towards value-addition and advanced manufacturing. Given the government’s push towards localisation and schemes like the PLI (Production Linked Incentive) for the automotive industry, India is being seen as a serious contender for a potential manufacturing hub going forward.
On the other hand, when one looks at the last two years of the pandemic, unlike China, India continues to be seen as better equipped to manage Covid19. For instance, the automotive industry didn’t go under complete lockdown for a long period, thus showing the resilience of the sector.
“If you look at India’s growth story, everything is pointing in the right direction. Even in the first 3 months of the Covid-19 pandemic, we didn’t see any bankruptcies or major fatality in terms of human lives even in the second wave,” highlighted Kapur.
When asked about the upcoming trend of contract manufacturing, Kapur agreed that it was a great opportunity to meet the requirements of the industry. Auto companies should better prepare themselves to take advantage of the opportunity.
Over 700 exhibitors at Auto Component Show 2023
While there seems to be a challenge around the rise in the number of Covid-19 cases around the globe, there seems to be huge excitement around the return of the Auto Expo & Component Show 2023.
According to Mehta, the Auto Component Show 2023, has received a tremendous response.
“The show is completely sold out and we have a huge number of participants in the waiting list. We have received a significant response from participants in the international pavilion. There are more than 700 companies participating at the Auto Component Show 2023,” revealed Mehta.