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    Latest Update: March, 2020: Auto Components Industry in India

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    India became the fourth largest auto market in 2018 with sales increasing 8.3 per cent year-on-year to 3.99 million units. It was the seventh largest manufacturer of commercial vehicles in 2018.

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    Latest Update: March, 2020: Auto Components Industry in India

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    India became the fourth largest auto market in 2018 with sales increasing 8.3 per cent year-on-year to 3.99 million units. It was the seventh largest manufacturer of commercial vehicles in 2018.

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    India became the fourth largest auto market in 2018 with sales increasing 8.3 per cent year-on-year to 3.99 million units. It was the seventh largest manufacturer of commercial vehicles in 2018.

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    30 views6 pages

    Latest Update: March, 2020: Auto Components Industry in India

    Uploaded by

    C.N. Krishna
    India became the fourth largest auto market in 2018 with sales increasing 8.3 per cent year-on-year to 3.99 million units. It was the seventh largest manufacturer of commercial vehicles in 2018.

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    © All Rights Reserved
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    Auto Components Industry in India

    Latest update: March, 2020

     SNAPSHOT
     SHOWCASE
     INFOGRAPHIC
     REPORTS
    Last Updated: March, 2020
    INDIAN AUTO COMPONENTS INDUSTRY REPORT  (SIZE: 759.86
    KB ) (APRIL, 2020)
    Introduction
    The Indian auto-components industry has experienced healthy growth over the last
    few years. The auto-component industry of India has expanded by 10.6 per cent to
    reach at a level of US$ 56.2 billion in FY19.
    The auto-components industry accounts for 2.3 per cent of India’s Gross Domestic
    Product (GDP) and employs as many as 1.5 million people directly and indirectly
    each. A stable government framework, increased purchasing power, large domestic
    market, and an ever-increasing development in infrastructure have made India a
    favourable destination for investment.
    Market Size
    The Indian auto-components industry can be broadly classified into the organised
    and unorganised sectors. The organised sector caters to the Original Equipment
    Manufacturers (OEMs) and consists of high-value precision instruments while the
    unorganised sector comprises low-valued products and caters mostly to the
    aftermarket category.
    India’s exports of auto components increased at a CAGR of 8.34 per cent, during
    FY14-FY19, with the value of auto component exports increasing from US$ 10.16
    billion in FY14 to US$ 15.17 billion in FY19. This has been driven by strong
    growth in the domestic market and increasing globalisation (including exports) of
    several Indian suppliers. Growth is further expected to accelerate to 8-10 per cent
    in FY19 due to pick up in global scenario. ** Turnover of the aftermarket has
    increased at a CAGR of 11.35 per cent from US$ 5.90 billion in FY14 to US$
    10.10 billion in FY19 and expected to reach US$ 32 billion by 2026. Turnover of
    automotive component industry stood at Rs 1.79 lakh crore (US$ 25.61 billion) in
    FY20 (April-Sept 2019). During April-September 2019, exports of auto
    components grew by 2.7 per cent to Rs 51,397 crore (US$ 7.35 billion).
    According to the Automotive Component Manufacturers Association of India
    (ACMA), the Indian auto-components industry is expected to register a turnover of
    US$ 100 billion by 2020 backed by strong exports ranging between US$ 80- US$
    100 billion by 2026.
    Investments
    The Foreign Direct Investment (FDI) inflows into the Indian automotive* industry
    during the period April 2000–December 2019 were recorded at US$ 23.89 billion,
    as per data by the Department for Promotion of Industry and Internal Trade
    (DPIIT).
    Some of the recent investments made/planned in the Indian auto components sector
    are as follows:

     In February 2020, National Engineering Industries Ltd (NEIL) announced


    investment of Rs 100 crore (US$ 14.31 million) over the next three years for
    producing needle roller bearing at its Jaipur facility.
     In January 2020, Tata AutoComp Systems entered a joint venture with
    Beijing-based Prestolite Electric to enter the electric vehicle (EV)
    components market.
     In October 2019, Minda Industries acquired Germany-based automotive
    lamps firm Delvis Gmbh along with two of its subsidiaries for Rs 164 crore
    (US$ 23.47 million).
     In August 2019, Eaton has partnered with Pune-headquartered technology
    firm KPIT.
     In April 2019, Durr, a German automotive painting and sealing company,
    entered into a partnership with Patvin to provide automated painting
    solutions for two or three-wheelers and agricultural machinery for the Indian
    markets.
     As of January 2019, Lite Auto Components Pvt Ltd, a part of Hindustan
    Magnesium Products Pvt Ltd plans to invest Rs 500 crore (US$ 69.30
    million) to set up Magnesium-based manufacturing plant in Andhra Pradesh.
     Schaeffler India, the Indian arm of Germany’s automotive and industrial
    parts maker, is planning to invest Rs 300 crore (US$ 46.66 million) per
    annum over FY18-19.
     As of December 2018, German automotive major Continental has planned
    investments of Rs 180 crore (US$ 25.65 million) for setting up a premium
    surface materials facility in Pune. The facility will have an initial capacity of
    five million square metres and is expected to start production in 2020.
     In October 2018, IMI Precision Engineering inaugurated its second largest
    manufacturing facility in the Asia Pacific region. The company is planning
    to expand its product and technical offerings over the course of the next few
    years.
     As of September 2018, air-compressor manufacturer Elgi Equipments is
    going to invest Rs 18 crore (US$ 2.56 million) for setting up of a motor
    production facility in India. The facility is expected to be commissioned in
    Q1 FY20.

     
    Achievements
    Following are the achievements of the government in the past four years:

     In April-December 2019, 540,384 units of passenger vehicles were exported


    from India.
     The FAME – India Scheme formulated by Department of Heavy Industry
    led to a continuous increase in registered OEMs and vehicle models. Also,
    the scheme enhanced the sales of electric vehicles and about 261,507
    electric/hybrid vehicles were supported under the scheme up to December 6,
    2018. In February 2019, the Government of India approved the FAME-II
    scheme with a fund requirement of Rs 10,000 crore (US$ 1.39 billion) for
    FY20-22.
     Under National Automotive Testing and R&D Infrastructure Project
    (NATRiP) various facilities including passive safety labs comprising of
    crash core facility and crash instrumentations including dummies were
    established at ICAT-Manesar & ARAI-Pune
     To give a fresh thrust to e-mobility in public transport, Department of Heavy
    Industry announced the launch of public & shared mobility based on electric
    powertrain.

    Government Initiatives
    The Government of India’s Automotive Mission Plan (AMP) 2006–2016 has come
    a long way in ensuring growth for the sector. Indian Automobile industry is
    expected to achieve a turnover of $300 billion by the year 2026 and will grow at a
    rate of CAGR 15 per cent from its current revenue of $74 billion.
    As per the Union Budget 2019-20, government moved GST council to lower the
    GST rate on electric vehicles from 12 per cent to 5 per cent. Also, to make electric
    vehicle affordable to consumers, our government will provide additional income
    tax deduction of Rs 1.5 lakh (US$ 2,115) on the interest paid on loans taken to
    purchase electric vehicles.
    Government has come out with Automotive Mission Plan (AMP) 2016-26 which
    will help the automotive industry to grow and will benefit Indian economy in the
    following ways: -

     Contribution of auto industry in the country’s GDP will rise to over 12 per
    cent
     Around 65 million incremental number of direct and indirect jobs will be
    created
     End of life Policy will be implemented for old vehicles
    Road Ahead
    The rapidly globalising world is opening up newer avenues for the transportation
    industry, especially while it makes a shift towards electric, electronic and hybrid
    cars, which are deemed more efficient, safe and reliable modes of transportation.
    Over the next decade, this will lead to newer verticals and opportunities for auto-
    component manufacturers, who would need to adapt to the change via systematic
    research and development.
    National Electric Mobility Mission Plan aims at achieving sales of 6-7 million
    units of hybrid and electric vehicles by 2020. As per Automobile Component
    Manufacturers Association (ACMA) forecasts, automobile component exports
    from India are expected to reach US$ 80 billion by 2026
    The Indian auto-components industry is set to become the third largest in the world
    by 2025. Indian auto-component makers are well positioned to benefit from the
    globalisation of the sector as exports potential could be increased by up to US$ 30
    billion by 2021E.
    Note: Conversion rate used as on January 2020, Re 1 = US$ 0.01402
    Notes: ** As per CRISIL Research, * - Includes automobile and auto-components,
    E – Estimated, SAMARTH - Smart & Advanced Manufacturing and Rapid
    Transformation Hub
    Disclaimer: This information has been collected through secondary research and
    IBEF is not responsible for any errors in the same.

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