ACMA exhorts suppliers to think global, innovate and scale up operations

New Delhi, 5 September, 2012: ACMA, the apex body of the auto component industry in India, today hosted its 52nd Annual Session and National Conference on the theme of ‘Auto Component Industry - Ready for The Transition’.

Driving the need to look beyond conventional manufacturing, the conference saw speakers focus on the Indian automotive component industry’s need to diversify into adjacent industries, innovation and R&D if it wants to emerge as one of the leading automotive manufacturing and product development hubs of the world. Having recorded growth at 15 percent CAGR for the past five years, it is at the point of inflection and must scale up.

Speaking at the inaugural session Praful Patel, Union minister of Heavy Industries & Public Enterprises, who inaugurated the event, said: “As per the 12th Five-Year Plan, the ministry is reviewing targets set up under the Automotive Mission Plan 2006-16. The extrapolations that have been drawn clearly indicate that the output of the automobile and auto component industry would reach US$ 145 billion by 2016, accounting for more than 10 percent of the country’s GDP and in turn generate employment for more than a million people”.

The minister said to be globally competitive, it is essential for the Indian auto component industry to move up the value chain and to innovate and invest in product and process improvement through meaningful R&D. He enumerated the following imperatives:

• Industry to work towards creating capacity ahead of demand, in turn decreasing the cost of imports

• Industry to focus on increasing export prospects through bilateral routes and regional FTAs

• Focus on adequate talent creation, retention and skilling

The ACMA Annual Session also saw the launch of two studies. The joint ACMA-McKinsey study on ‘Leveraging Superior Growth Foresight to Strengthen Company Competitiveness’ reveals that while the Indian auto components growth story is going to stay intact in the near future, the industry cannot afford to rest on its laurels. It elucidates essentials on where the growth and value creation are likely to migrate and how Indian component industry can build a global footprint and assimilate capabilities through targeted acquisitions. It also elaborates on the need and the path to be taken by the auto component industry to grow into adjacent markets such as defence offsets and railways by leveraging their core competency.

The other joint study is ‘Growing beyond Manufacturing: India as an Emerging Auto Product Development Hub’ – conducted by ACMA-Ernst & Young. It says that to support India’s emergence as a global product development hub, it is essential that Indian component manufacturers build progressive R&D capabilities and that a supportive ecosystem for capacity and capability development be created. The study illustrates the trends in product development and the way forward for the automotive component manufacturers in India to move up the value chain through collaborative R&D.

Speaking at the inauguration of the ACMA convention, Arvind Kapur, president, ACMA and managing director, Rico Auto Industries, said: “There is a symbiotic connect between the growth of the automobile and auto component industry and the economy. The Indian economy is experiencing a sharp downturn in investment cycle, domestic policy paralysis and an uncertain trade environment. However, underpenetrated markets and the unfulfilled mobility aspiration of the people of India give us the confidence of a steady growth trajectory.”

“To be truly globally competitive, our relationship with our customers must transcend from being transactional to a mutually beneficial one. Neither build-to-print nor operational excellence is enough to be globally competitive. We have to partner with the OEMs in design, development and testing and build affordable, innovative solutions,” added Kapur.

Meanwhile, ACMA’s Suppliers Portal, a joint initiative of ACMA and OEMs, was formally launched. It showcases details of various Tier 2 and Tier 3 component suppliers, enabling them to connect better with OEMs and Tier 1 players. Interestingly, ACMA non-member companies can also post their details on the portal free of charge.