India has good scope of global trade in auto components
Ahmad Shariq Khan & Aamir H Kaki
Even if the market has shrunk by few percentage points in the last few years, India’s scope of global auto components trade in various emerging and new markets remains extremely large, feels Vinnie Mehta, Director General, Automotive Component Manufacturers Association of India (ACMA).
He further said that global opportunities at the moment are vast and global exports market for auto components stood at $1.3 trillion while India’s exports are currently around $11 billion. After five years of growth, India’s exports of automobile components dropped 3.7 percent to $10.8 billion in the fiscal of 2015-16, against the $11.2 billion in the previous fiscal, when exports grew at 10 percent.
However, Mehta said that the traditional benefits of lower costs and skilled engineering workforce supported by a strong vehicle demand in the domestic market, have made India stand in good stead till now.
“In order to remain competitive globally, the auto components sector in India needs to emphasise on constant research and development (R&D) activities, product differentiation, design capabilities and to enhance quality in order to fulfil the evolving requirements of the consumers, who increasingly prefer a more value-added product than a normal one,” he added.
The overall Foreign Direct Investment (FDI) inflows into the automobile industry of India were at $15.07 billion during the period from April 2000 to March 2016, as per the data given by the Department of Industrial Policy and Promotion (DIPP).
India’s auto components industry is poised to become the world’s third largest by 2025. The Indian manufacturers are well placed to gain from the globalisation as exports are likely to increase up to four times to $40 billion by 2020.