Recovery in overseas automotive markets is likely to boost components exports from India. The automotive component exports, which was stagnant for the past two years, is expected to increase year-on-year by around 30% this fiscal to $4.75-$5 billion, experts said. Last year, components exports from India had registered a flat growth due to the adverse environment in global automobile markets.

Automotive Components Manufacturers Association (ACMA) executive director Vinnie Mehta told FE, ?The recession hit overseas markets, primarily the US and European ones, have reported sluggish auto sales in the past two years. A few transactions have started happening this year that would push up auto component exports from India.?

He said the auto markets in the US and certain parts of western Europe are slowly witnessing a revival. The auto sales in the Asian market, particularly China and other emerging countries, are giving hope for component manufacturers in India, he added.

The vehicle registrations, particularly commercial vehicles, have surged in the current calendar year in Europe. According to European Automobile Manufacturers Association (EAMA), the car registrations marginally increased year-on-year by 0.2% to 7.28 lakh units in January-June period while CV registrations increased by 8.5% to 12.24 lakh units in the first 10 months of 2010. In China, the auto sales climbed by 34% from a year earlier to 16.4 million units, according to China Association of Automobile Manufacturers (CAAM).

Mehta said the component exports in the current financial year are likely to increase to $4.75-$5 billion from $3.8 billion in the previous fiscal. The component exports from India remained flat as compared to $3.8 billion in 2008-09.

Meanwhile, several global Original Equipment Manufacturers (OEMs) have increased their component procurement from India. There are around 30 overseas vehicle manufacturers including General Motors (GM), Ford and Nissan and component producers like Magna and Trelleborg have set up their International Procurement Offices (IPOs) in India to source components for their overseas operations.

Karl Sylm, president and managing director of GM India, said the company is sourcing components for both its domestic and international operations. GM has signed contract to procure $ 550 million worth automotive components for its global operations. The majority of components procured from India has been used for its manufacturing operations in North America and Europe. He said the size of component sourcing for its international operations is expected to touch $1 billion by 2012-13. Of its total 250 suppliers in India, around 75 suppliers are meeting GM’s international requirement.

Of the total components exports from India in the last fiscal, Europe accounted for 40% followed by Asia and North America at 24% and 22% respectively. But this year, the Europe’s share will decline while the exports to Asian countries will increase, Mehta said. Moreover the component manufacturers in India have identified new markets like Latin America and Brazil, when traditional markets like the US and Europe took a hit in the past two years.

Nissan is one of the major auto makers sourcing components from India, primarily for its Asian operations. Kiminobu Tokuyama, managing director and chief executive officer of Nissan Motor India said the company is sourcing auto parts from India mainly for its operations in China, Japan and Thailand. It is likely to increase its component sourcing from India to $40 billion by 2012.

Component exports recorded a robust growth of 32% at $ 3.52 billion in 2007-08 but the growth declined in the subsequent years due to recession. As both domestic and overseas markets are showing recovery, the local component makers have undertaken capacity expansion. The auto component industry in India added $ 1.7 billion in capacity in 2009-10 in several greenfield as well as expansion projects. The industry is expected to add another $2.5-$3 billion in 2010-11.

Body and structural components account for a whopping 40% in the Indian auto component industry followed by engine & exhaust at 20% and 10% each from the segments like electronics & electrical, transmission & steering, suspension & braking.