Component manufacturers who participated in the 9th Auto Expo are optimistic about recording a 15-20 percent growth year-on-year, in the next five years due to the current buoyancy in the Indian automotive sector as well as major investment and expansion plans of global automotive manufacturers. Over 1,900 companies in the auto components, ancillary and allied sectors were part of the Auto Expo. It was the largest ever representation in the history of the show, signalling optimism for a robust growth of the automotive sector in the coming decade. Exhibitors in the components and ancillary sector felt that with the direct participation of over 40 vehicle manufacturers from over 25 countries, the event has provided them an exclusive forum to demonstrate their quality and technological capabilities to potential buyers both domestic and international.

Banking on global sales

“With all the outsourcing opportunities available for component manufacturers, there seems to be no looking back. The industry has truly become globalised with both its customer base as well as the acquisitions Indian companies are doing at all scales. This trend seems to be here to stay, especially since the industry is not only banking on domestic sales but global sales,” said Sameer Kanwar, executive director (Strategic Planning), Bharat Gears Ltd.

Trevor Mendoza, GM – Business Development, Pricol Ltd, observed that acquisition of overseas companies and brands too make a headstart and also factories located near customers have helped component-makers increase their responsiveness, in addition to opening global offices for support. Increase in input costs and constant appreciation of the rupee against the US dollar have been imparting tremendous cost pressures on Indian auto component manufacturers, he further observed.

“The real challenge for the industry is to gear up for the latest technology and to invest in R&D to face global competition,” asserted M Kalaichelvan, JMD, Manatec Electronics, a leading manufacturer of garage equipment, based in the Union Territory of Puducherry. He said that the garage equipment industry, currently growing at 7-10 percent, has the potential to achieve 15-20 percent growth in the next five years keeping in line with the overall growth of the automotive sector. The company has set a target of exporting 40 percent of the products manufactured in the coming fiscal year.

The total size of the Indian auto component industry is US$ 14 billion, out of which US$ 2.0 billion is direct export of components. The world production of auto components is expected to reach US$ 1.7 trillion by 2015. It is estimated that about US$ 700 billion worth of components would be sourced out from Low Cost Countries (LCCs) in the next 7-8 years.

If India targets a 10 percent share of this potential, it would mean US$ 70 billion, nearly five times the current size of the industry in India, giving a huge business opportunity for the Indian auto component and ancillary industry.