ACMA, the apex body representing India’s Auto Component manufacturing industry, announced the findings of its Industry Performance Review for the fiscal 2011-12. The turnover of the auto component industry stood at Rs. 210,400 crore (US$ 43.4 billion) for the period April 2011 to March 2012, registering a growth of 15.7pc (in rupee terms) over the previous year and a CAGR of 19pc (in rupee terms) over the last five years. This data represents the entire supplies from the auto component industry to the on-road and off-road vehicle manufacturers and the aftermarket in India and overseas from ACMA member and non-member companies, including component suppliers captive to the OEMs and the unorganised & smaller players.
The sales of vehicle in India moderated in 2011-12 and this also impacted the performance of the auto component industry. While the uncertainty in the domestic market continues, ACMA is optimistic that the medium & long-term prospects of the component industry are intact. However, in the current fiscal 2012-13, the industry is expected to grow in the range of 8-10pc.
Commenting on the performance of the auto component industry, ACMA President, Surinder Kanwar said: “The sector grew to US$ 43.4 billion in 2011-12. Ambiguity in the fuel price regime, high cost of capital, high interest rates, and slowing down of investment in infrastructure, is adversely impacting the growth of the automotive industry. Today, there is need for greater collaboration between the component manufacturers, OEMs, machine tool suppliers & the raw material industry. Our aim would be to gradually make a transition from transactional relationships to those that are synergistic in nature. We need to partner in design, development & testing and develop affordable and innovative solutions. Further, the component industry also needs to actively consider diversifying into adjacent markets including defence, aerospace, railways, farm implements etc. to sustain the growth momentum.”
Delineating his thoughts on the current policy environment and the need for supporting auto component manufacturing in the country, ACMA Vice President, Harish Lakshman said: “The Indian Auto Component Industry is confident of scaling the target of US$ 115 billion by 2020. To achieve this, we urge the government for long-term stable policies and export incentives that are critical for sustaining the industry in these times of global slowdown. The government continues to push for more multi-lateral and bilateral trade agreements, increasing the threat of imports due to a non-level playing field, in contrast many of the competitor nations are imposing non-tariff barriers on imports. The government policies pertaining to tax regimes, FTAs & infrastructure development need to be relooked for the overall growth of the auto component industry.”
Sharing his thoughts on the need for a conducive ecosystem for the auto component industry in India, ACMA Executive Director Vinnie Mehta mentioned, “While the road to becoming the preferred destination for sourcing of components for global supply is still long and arduous, the leadership team in ACMA has been working together to address the several pertinent concerns of the component industry. India is already emerging as one of the largest global manufacturing hubs for small cars and other commercial vehicles. To take advantage of affordable R&D and develop India as an integrated hub, OEMs and suppliers need to increase collaboration for mutual benefit.”
Some observations of the ACMA Industry Performance Review 2011-12:
Exports: The exports of auto components grew to US$ 6.9 billion from US$ 5.2 billion in 2010-11 growing 32.7pc. Europe accounted for 36pc of exports followed by Asia at 28pc and North America at 23pc. The exports to Europe increased to 32pc as compared to the previous fiscal, with America and Asia registering increase in exports to 27pc & 28pc respectively. The key export items include engine parts, transmission parts, brake system & components, body parts, exhaust systems, turbochargers etc.
Imports: The imports of auto components also grew by 25pc to US$ 10.6 billion in 2011-12 from US$ 8.5 billion in 2010-11; almost 85pc of the imports were accounted for by the OEMs, the rest 15pc by the aftermarket. Asia and Europe contributed to over 57pc and over 35pc of the imports respectively. Within Asia - China, South Korea and Thailand contributed to the maximum imports while from Europe the key contributors were Germany, Italy and Czech Republic. The quantum of imports has also increased due to several FTAs and other trade agreements signed by the Government.
Capacity Addition: For the fiscal 2011-12 an estimated investment of around US$ 1.6-1.9 billion was made in the auto component sector. Due to moderation in vehicle sales and depressed market sentiments, the investment in 2011-12 declined compared to the previous year. Capex in 2010-11 stood at around US$ 2-2.5 billion. The cumulative investment (gross-block) in the auto component sector in India over the last five years stood at over US$ 7 billion.
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