India’s component industry records best-ever turnover of Rs 560,000 crore, grows 33% in FY2023

Riding on strong domestic market vehicle sales of 21.20 million units, a robust aftermarket and steady exports despite recessionary trends in key global markets, India Auto Component Inc delivers its best performance; supplies to EV industry now account for 2.7% of industry turnover.   

Autocar Pro News Desk By Autocar Pro News Desk calendar 07 Aug 2023 Views icon7417 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

If additional proof was required about just how strongly India Auto Inc is performing, then it has come from the Automotive Component Manufacturers Association of India (ACMA) today. The apex body representing India auto component manufacturing industry announced the findings of its Industry Performance Review for FY2023 and the numbers are very good. India Auto Component Inc’s turnover stands at around Rs 560,000 crore (US$ 69.7 billion), registering robust growth of 32.8% over FY2022, which was its previous best.

Component suppliers and the industry has benefited from the strong 20% YoY growth in the sale of automobiles in India in FY2023 – 21.20 million units including record sales of 3.89 million passenger vehicles. Adding tailwind to the sails of the industry, demand in the domestic aftermarket was also up as were exports of made-in-India auto parts.

Commenting on the performance of the auto component industry, Vinnie Mehta, Director General, ACMA said: “On back of significant vehicle sales in the country, a robust aftermarket and steady exports, the auto component industry demonstrated its best ever performance in FY2023. The component industry sized up to Rs 5.60 lakh crore (US$ 69.7 billion), registering 32.8% growth and thus outpaced its highest ever turnover of Rs 4.20 lakh crore in FY2022. Exports grew by 5.2% to Rs 1.61 lakh crore (USD 20.1 billion) while imports grew by 10.9% to Rs 1.63 lakh crore (USD 20.3 billion). The aftermarket, estimated at Rs 85,333 crore, also witnessed a steady growth of 15 percent. Component sales to OEMs in the domestic market grew by 39.5% to Rs 4.76 lakh crore.”  

Sharing his insights on the industry’s performance, Sunjay Kapur, President, ACMA and chairman of Sona Comstar, said: “It is pertinent to note that apart from growth in vehicle sales, significant higher value addition from the component sector has led to its noteworthy performance in FY2023. On the trade front, it is appreciable that there has been steady growth in exports despite recessionary trends in Europe and the US which are key export destinations for the auto components industry. Strong rebound in vehicle sales in the domestic market also led to sharper rise in imports that has translated into trade deficit this year.”

Elaborating on the mood of the industry and outlook for the near future, Kapur said: “Whilst the automotive value-chain faced significant disruptions in the wake of the pandemic, vehicle sales, especially in the passenger vehicle, commercial vehicle and tractor segments have now reached pre-pandemic levels. Even the two-wheeler industry has recovered well. With significant mitigation in the supply-side issues of availability of semiconductors, input raw-material costs and logistics, the vehicle industry is expected to continue to perform well in FY2024, which augurs well for the auto components sector. That apart, exports and growth in domestic aftermarket continue to be robust.”

Sunjay Kapur: "There are a lot of imports happening on electronic content. Our endeavour is to increase exports and reduce imports."

Aiming to reduce imports

Kapur says it is an endeavour of the industry to reduce dependency on imports, but it won't happen overnight. "We had a trade surplus last year, this year, we have had a trade deficit of US$ 200 million. There is definitely a drive towards localisation. There are a lot of imports happening on electronic content. Our endeavour is to increase exports and reduce imports," added Kapur.

ACMA's sourcing group had set a target with the Ministry of Heavy Industries in FY-20 and the industry is ahead of the stated targets. "We had a target of reducing imports by 2-3% . . . we have reduced it by 6 percent. In FY2019, there was a trade imbalance of $ 2.5 billion, this turned into a surplus of $700 million last year. There was a marginal deficit of $200 million, but we are confident of going back to surplus with exports growing faster than imports," said ACMA’s Vinnie Mehta.  

ACMA is conducting a study on deeper localisation of electronics and it will come out with the recommendation or support it needs from the government to reduce electronic imports, said Mehta.  


"We are working with several IPOs of Tier-1s and OEMs that are chalking their global sourcing strategies from India, and additionally, the interest in India from a perspective of adapting to technology is huge, and that is the reason why companies from other countries are first looking at India when they are scouting to source components. Case in point, Israel, from where we have seen a huge interest and have hosted many delegations to identify opportunities for components sourcing from India," said Kapur.

"The mood in terms of sourcing from India is very positive and that is why we saw a significant uptick in our exports to global markets. Moreover, a lot of multinational component players are expanding their capacities in India," added Mehta.


Sales to OEMs: Auto component sales to OEMs, in the domestic market, at Rs 4.76 lakh crore (USD 59.3 billion) grew 39.5% over FY2022. Consumption of increased value-added components and shift in market preference towards larger and more powerful vehicles contributed to the increased turnover of the sector.

Exports: Overseas shipments witnessed growth of 5.2% to Rs. 1.61 lakh crore (US$ 20.1 billion) in FY2023 in contrast to Rs 1.41 lakh crore (US$ 19.0 billion) in FY2022. North America, accounting for 32% of exports, saw a growth of 8% while Europe, which accounts for 31% and Asia for 26% grew 3% and 4% respectively. The key export items included drive transmission and steering, engine components, body/chassis, suspension and braking.

Imports: Traction in the domestic market also reflected on imports of components into India. Component imports grew by 10.9% in 2022-23 to Rs. 1.63 lakh crore (US$ 20.3 billion) from Rs. 1.36 lakh crore (US$ 18.3 billion) in 2021-22. Asia accounted for 66% of imports, followed by Europe and North America at 26% and 6% respectively. Imports from Asia grew 12%, while those from Europe by 6% and from North America by 23%.

Aftermarket: Increased movement of vehicles after the pandemic and surge in demand for used vehicles led to buoyancy in the aftermarket across all segments. The turnover of the aftermarket in FY2023 stood at Rs 85,333 crore (US$ 10.6 billion) compared to Rs 74,203 crore (US$ 10.0 billion) in FY2022.

Strong tailwinds for growth but some headwinds too

India Auto Component Inc has strong tailwinds behind it to drive future growth. This includes high estimated GDP growth for FY2024 and continued strong domestic vehicle demand, while the emphasis on infrastructure development, stable international demand and exports, sharpened focus on clean and new technology, as well carbon-neutrality are other growth drives.

Yes, there are likely headwinds too to growth in the form of the Russia-Ukraine War, recessionary trends in Europe and the US, as well as the high GST rates on automotive components in India.

Targeting strong double-digit growth in FY2024

A confident ACMA president Sunjay Kapur is of the opinion that the industry will scale a $100 billion peak in FY2025 and it is on a good path of a strong double-digit growth in FY2024.

"Last year we said, we will deliver double-digit growth . . .  and we have delivered. This year too, we should continue the growth momentum, maybe not 33%, but would surely be in double digits. I dont see any black swan event on the horizon, so we should continue to grow," pointed out Kapur. 

"The 'China+1' de-risking strategy of OEMs augurs well for the country to become a global manufacturing hub for automotive components. The technology implementation in manufacturing in terms of automation, and Industry 4.0 solutions will strengthen the industry from catering to the demand for the global markets", said Kapur.

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