The Indian auto component industry grew by 65 percent to Rs. 1.69 crore (USD 26.6 billion) in the first half of 2021-22 and most auto component makers are ready to enter the EV supply chain announced ACMA (Automotive Component Manufacturers Association of India), the apex body representing India's auto component manufacturing industry.
In a press conference held earlier today, ACMA announced the findings of its Industry Performance Review for the first half of fiscal 2021-22, stating the impact of the second COVID-19 wave was not as severe on the industry as the first one.
"Despite the slow offtake in vehicles sales due to supply-side issues, especially in the first quarter, the auto component industry demonstrated a remarkable turnaround in the first half of FY 2021-22. With significant growth in all segments – supply to OEMs, exports as also the aftermarket, the component industry grew to Rs.1.96 lakh crore (USD 26.6 billion) registering 65 percent growth," Vinnie Mehta, Director General, ACMA said.
Mr. Mehta added, exports grew by 76 percent to Rs.68.7 lakh crore (USD 9.3 billion) while imports grew by 71 percent to Rs.64.3 lakh crore (USD 8.7 billion) leading to a trade surplus of USD 600 million. The Aftermarket, estimated at Rs. 38,895 crore also witnessed a steady growth of 25 percent. Component sales to OEMs in the domestic market grew by 76 percent to Rs.1.53 lakh crore."
A surge in international demand resulted in a positive trade balance, Mr. Mehta explained.
While supply-side constraints such as the rising cost of logistics, raw materials, and non-availability of semiconductors continue to remain a challenge, the growth in exports has been a noteworthy development, the organization noted.
USA, Germany, and Thailand remain the top 3 export markets for India with the exports growing across all products types. In terms of imports, Asia and Europe account for 90 percent of all imports both having outperformed the average growth. Engine components, body, chassis, BiW, suspension & braking account for over 50 percent of the imported products.
"Despite the resurgence of demand for vehicles, supply-side issues of availability of semiconductors, increasing input costs, rising logistics costs, and availability of containers, among others, continue to hamper recovery in the automotive sector. The auto component industry, in this backdrop, displayed remarkable resilience," said Sunjay Kapur, President, ACMA, commenting on the performance of the auto component industry.
"Increased value-addition to meet regulatory compliance, fast recovery in external markets, and traction in the domestic aftermarket market have contributed to the growth of the sector in the first half of FY 2021-22," he added.
Speaking of opportunities in the auto component industry, Kapur said, "we recognize software as a trend and significant opportunity for the auto component industry." Telematics and embedded systems, electric vehicles, autonomously driven vehicles, digitization will be very important for the auto component industry.
ACMA noted vehicle demand is expected to improve \ and measures like increased focus by the auto industry on deep localization and the recent announcements by the of PLI schemes on Advanced Chemistry Cell (ACC) Batteries and Auto & Auto Components will facilitate the creation of an advanced automotive value chain and help India develop into an attractive alternative source of high-end auto components.
Speaking on the industry outlook and near and mid-term future, Kapur mentioned, "despite concerns of another wave of the pandemic, the industry is cautiously optimistic about the prospects of the Indian economy and the automotive sector for FY2021-22. Auto component manufacturers have now, by and large, recovered and the investment cycle has also commenced."
Commenting on electric mobility, Kapur added, 60 percent of the auto component respondents' ACMA surveyed were already equipped to be part of the EV supply chain, while the rest would be ready in the next two odd years.