The Indian auto component industry has the potential to earn 50% of its total revenue from exports only by 2015 as the industry has been drawing the attention of global auto players.
According to Vishnu Mathur, Executive Director, Automotive Component Manufacturers Association (ACMA), the export of auto components in India would grow phenomenally in coming years. It is likely to grow more than eight times by 2015 from the current level of 20% ($2.9 Billion) and the total turnover would reach somewhere around $15 Billion, as reported by Financial Express.
According to ACMA, the growth in domestic auto component market is not as good as in exporting the products. The industry has the potential to earn 50% of its total earnings from exports by 2015 while domestic market is expected to touch $40 Billion.
The research report "Indian Automobile Sector-A booming Market" RANCOS said that the export by the Indian auto component industry was US$ 1800 Million during 2005-06 with a growth of 28.57% as compared to 2004-05. In fact, 75% of the total auto component export was generated by car companies in 2005-06. Indian auto component market has the potential to provide Original Equipment Manufacturers (OEMs) a good market and can reduce their manufacturing cost significantly.
The industry experts believe that stringent laws in Europe and the US regarding safety and emission norms are pressurizing global car manufacturers to cut down costs. Consequently, all the big global auto players are looking towards India. India has emerged as a hub of component manufacturing where right mix of quality standards and technology are easily available.
Other reasons for high growth in the export of auto components include payback differentials, decline in the profit margins of companies, and slowdown in the domestic vehicle market due to rising interest rates for auto loans. Moreover, the declining value of dollar against rupee by almost 13% is also responsible for the boom in the industry. But at the same time, it is causing heavy loses to auto component exporters.
Foreign companies are willingly investing in the industry as they feel it is a better place to invest than anywhere else in the world. This is possible due to high quality of infrastructure, easy tax system and favorable government policies.
Furthermore, political stability, and high industrial and economic growth have captured the attention of global players and investors. Low cost and increasing focus on specialization in the segment is forcing overseas companies to come in India.
Source:-RANCOS
No comments:
Post a Comment