Market Research Report : Auto ancillary market in india 2014 - SampleNetscribes, Inc.
For the complete report, get in touch with us at: info@netscribes.com
Abstract :
The report highlights the analysis of the drivers and explains the factors for growth of the industry. Growing Automotive industry, the auto after market demand, the healthy economic outlook also opportunities from new US IT Compliance Law, are the key drivers of this market. Auto makers are placing bulk orders for supply of auto parts to the auto parts manufacturers. India is also an attractive destination for the foreign investors with consistently increasing FDI in the automobile sector. The original equipment manufacturers (OEMs) and the aftermarket or replacement market are the two prime source of demand for auto components in India but Strong aftermarket provides better sales stability and higher operating margins than an OEM.
There are various challenges too that the Auto Ancillary industry faces, Rising labor costs, Counterfeit Market, Technical Inefficiency and depreciating currency are the major challenges faced by the auto ancillary industry. Rise in steel prices further adds to the cost disadvantage as steel is a primary raw material for the auto ancillary industry. Organized sector facing serious threats from rapidly growing counterfeit market in India, Fake auto parts hold a considerable amount of share of the total aftermarket. Since the finishing and packaging of fake parts closely replicate the original products, consumers fail to differentiate between the fake and original parts. Depreciating currency has adverse impact on the imports resulting in declining profits for the import dependent auto parts manufacturers. However, on the positive side, it has increased the cost-competitiveness of exports and also OEMs will look towards sourcing from local players due to higher price of imports
Government has plans of setting up the National Automotive Board (NAB) which will act as a catalyst between the government and the auto parts industry. Auto Component manufacturing companies should identify the long term growth pockets and enhance global competitiveness accordingly. They should diversify into adjacent fields of business, such as defense, construction, farm implements etc. They should also cooperate with government to enhance country competitiveness.
Table of Contents :
Slide 1: Executive Summary
Macro Economic Indicators
Slide 2: GDP at Factor Cost: Quarterly (2010-11 - 2013-14), Inflation Rate: Monthly (Jul-Dec 2013)
Slide 3: Gross Fiscal Deficit: Monthly (Feb 2013 - Jul 2013), Exchange Rate: Half Yearly (Oct 2013- Mar 2014)
Slide 4: Lending Rate: Annual (2008-09 - 2011-12), Trade Balance: Annual (2010-11 – 2013-14), FDI Annual (2009-10 - 2012-13)
Market Overview
Slide 5: Auto Ancillary Market – Transition
Slide 6: Auto Ancillary Market – Overview
Slide 7: Auto Ancillary Market – Market Size & Growth (2008-18), Market Segmentation - Sector wise
Slide 8: Auto Ancillary Market – Contribution to Employment Generat
The Indian Auto Components Industry Latestvijaybudhdeo
Industry research on the Indian Auto components Industry. Inludes an overview of world auto component markets with a special emphasis on India-China comparison.
India Automobiles Sector Report April 2014iimjobs.com
For leading industry jobs, please visit www.iimjobs.com
India Automobiles Sector Report April 2014
India represents one of the world’s largest automobile industries. Easy availability of finance and rising income levels are encouraging the middle class population to upgrade their two wheelers to a car. Besides, the growing organised used car market has also been a positive growth factor in the used car market of the country. Driven by the above factors, the used cars market is anticipated to grow at a compound annual growth rate (CAGR) of 16 per cent during 2013–17, highlighted the RNCOS report titled, ‘Booming Used Car Market in India Outlook 2017’.
India is quietly becoming a production hub of high-end vehicles meant for export to China. The US-based motorbike maker Harley Davidson, Austrian motorcycle manufacturer KTM and Mahindra & Mahindra have also preferred to set up manufacturing facilities in India than in the relatively low-cost China and export the output.
Furthermore, India is set to become Mercedes Benz’s fastest-growing market worldwide ahead of China, the US and Europe, according to internal projections. We expect growth rates to be the fastest in India globally, and expect sales to move up by 10 per cent over the next five years or so, as per Mr Matthias Luhrs, Vice-President (Global Sales), Mercedes Benz Cars.
Automobiles production increased at a compound annual growth rate (CAGR) of 12.2 per cent over FY05-13, while the export volumes increased at a CAGR of 19.1 per cent.
Strong demand growth due to rising incomes, growing middle class, and the young population is likely to propel India among the world's top five auto-producers by 2015.
India has significant cost advantages; auto firms save 10-25 per cent on operations in India as compared to Europe and Latin America. A large pool of skilled manpower and a growing technology base are some of the leading factors.
The government aims to develop India as a global manufacturing as well as research and development (R&D) hub. There has been a wide array of policy support in the form of sops, taxes and FDI encouragement. Under the Union Budget 2013-14, the government has also proposed to allocate US$ 2.7 billion for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to bolster sales volumes of Medium and Heavy Commercial Vehicles (MHCV).
The world's cheapest car (Tata Nano) has directed focus towards the low-income market. Bajaj Auto, Hero Honda and Mahindra & Mahindra (M&M) jointly plan to develop a technology for two-wheelers to run on natural gas. Electric cars are likely to be a sizeable market segment in the coming decade.
Application of Statistical Quality Tools in the Root Cause Analysis of Indust...AM Publications
The primary objective of this paper is to define and illustrate several quality issues that are commonly faced by the automotive sector in India, and offer potential corrective measures to these problems using specific statistical quality control tools. While the organised automotive sector has been highly successful over the past two decades, advancement and improvement in the automotive sector have been hindered by a variety of issues related to the quality of their products and services. This sector is crucial to the development of the Indian economy and plays an instrumental role in the supply chain of the major players in the industry. The paper provides a comprehensive review and illustration of the causes attributed to the inefficiency of the sector, and potential solutions to these issues, thereby enabling them to ascend to the standards of organised service sectors.
India is emerging as global hub for auto component sourcing
Relative to competitors, India is geographically closer to key automotive markets like the Middle East and Europe. Tese are the major advantages for India to grow in automotive industry.
Market Research Report : Auto ancillary market in india 2014 - SampleNetscribes, Inc.
For the complete report, get in touch with us at: info@netscribes.com
Abstract :
The report highlights the analysis of the drivers and explains the factors for growth of the industry. Growing Automotive industry, the auto after market demand, the healthy economic outlook also opportunities from new US IT Compliance Law, are the key drivers of this market. Auto makers are placing bulk orders for supply of auto parts to the auto parts manufacturers. India is also an attractive destination for the foreign investors with consistently increasing FDI in the automobile sector. The original equipment manufacturers (OEMs) and the aftermarket or replacement market are the two prime source of demand for auto components in India but Strong aftermarket provides better sales stability and higher operating margins than an OEM.
There are various challenges too that the Auto Ancillary industry faces, Rising labor costs, Counterfeit Market, Technical Inefficiency and depreciating currency are the major challenges faced by the auto ancillary industry. Rise in steel prices further adds to the cost disadvantage as steel is a primary raw material for the auto ancillary industry. Organized sector facing serious threats from rapidly growing counterfeit market in India, Fake auto parts hold a considerable amount of share of the total aftermarket. Since the finishing and packaging of fake parts closely replicate the original products, consumers fail to differentiate between the fake and original parts. Depreciating currency has adverse impact on the imports resulting in declining profits for the import dependent auto parts manufacturers. However, on the positive side, it has increased the cost-competitiveness of exports and also OEMs will look towards sourcing from local players due to higher price of imports
Government has plans of setting up the National Automotive Board (NAB) which will act as a catalyst between the government and the auto parts industry. Auto Component manufacturing companies should identify the long term growth pockets and enhance global competitiveness accordingly. They should diversify into adjacent fields of business, such as defense, construction, farm implements etc. They should also cooperate with government to enhance country competitiveness.
Table of Contents :
Slide 1: Executive Summary
Macro Economic Indicators
Slide 2: GDP at Factor Cost: Quarterly (2010-11 - 2013-14), Inflation Rate: Monthly (Jul-Dec 2013)
Slide 3: Gross Fiscal Deficit: Monthly (Feb 2013 - Jul 2013), Exchange Rate: Half Yearly (Oct 2013- Mar 2014)
Slide 4: Lending Rate: Annual (2008-09 - 2011-12), Trade Balance: Annual (2010-11 – 2013-14), FDI Annual (2009-10 - 2012-13)
Market Overview
Slide 5: Auto Ancillary Market – Transition
Slide 6: Auto Ancillary Market – Overview
Slide 7: Auto Ancillary Market – Market Size & Growth (2008-18), Market Segmentation - Sector wise
Slide 8: Auto Ancillary Market – Contribution to Employment Generat
The Indian Auto Components Industry Latestvijaybudhdeo
Industry research on the Indian Auto components Industry. Inludes an overview of world auto component markets with a special emphasis on India-China comparison.
India Automobiles Sector Report April 2014iimjobs.com
For leading industry jobs, please visit www.iimjobs.com
India Automobiles Sector Report April 2014
India represents one of the world’s largest automobile industries. Easy availability of finance and rising income levels are encouraging the middle class population to upgrade their two wheelers to a car. Besides, the growing organised used car market has also been a positive growth factor in the used car market of the country. Driven by the above factors, the used cars market is anticipated to grow at a compound annual growth rate (CAGR) of 16 per cent during 2013–17, highlighted the RNCOS report titled, ‘Booming Used Car Market in India Outlook 2017’.
India is quietly becoming a production hub of high-end vehicles meant for export to China. The US-based motorbike maker Harley Davidson, Austrian motorcycle manufacturer KTM and Mahindra & Mahindra have also preferred to set up manufacturing facilities in India than in the relatively low-cost China and export the output.
Furthermore, India is set to become Mercedes Benz’s fastest-growing market worldwide ahead of China, the US and Europe, according to internal projections. We expect growth rates to be the fastest in India globally, and expect sales to move up by 10 per cent over the next five years or so, as per Mr Matthias Luhrs, Vice-President (Global Sales), Mercedes Benz Cars.
Automobiles production increased at a compound annual growth rate (CAGR) of 12.2 per cent over FY05-13, while the export volumes increased at a CAGR of 19.1 per cent.
Strong demand growth due to rising incomes, growing middle class, and the young population is likely to propel India among the world's top five auto-producers by 2015.
India has significant cost advantages; auto firms save 10-25 per cent on operations in India as compared to Europe and Latin America. A large pool of skilled manpower and a growing technology base are some of the leading factors.
The government aims to develop India as a global manufacturing as well as research and development (R&D) hub. There has been a wide array of policy support in the form of sops, taxes and FDI encouragement. Under the Union Budget 2013-14, the government has also proposed to allocate US$ 2.7 billion for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to bolster sales volumes of Medium and Heavy Commercial Vehicles (MHCV).
The world's cheapest car (Tata Nano) has directed focus towards the low-income market. Bajaj Auto, Hero Honda and Mahindra & Mahindra (M&M) jointly plan to develop a technology for two-wheelers to run on natural gas. Electric cars are likely to be a sizeable market segment in the coming decade.
Application of Statistical Quality Tools in the Root Cause Analysis of Indust...AM Publications
The primary objective of this paper is to define and illustrate several quality issues that are commonly faced by the automotive sector in India, and offer potential corrective measures to these problems using specific statistical quality control tools. While the organised automotive sector has been highly successful over the past two decades, advancement and improvement in the automotive sector have been hindered by a variety of issues related to the quality of their products and services. This sector is crucial to the development of the Indian economy and plays an instrumental role in the supply chain of the major players in the industry. The paper provides a comprehensive review and illustration of the causes attributed to the inefficiency of the sector, and potential solutions to these issues, thereby enabling them to ascend to the standards of organised service sectors.
India is emerging as global hub for auto component sourcing
Relative to competitors, India is geographically closer to key automotive markets like the Middle East and Europe. Tese are the major advantages for India to grow in automotive industry.
The balance of a payment is a systematic record of all its monetary transections with other countries of the world in a given period of time. i.e 1 year
A good slide on export vs import it will help you more to understand about export vs import. just look at this slide and you automatically see how worthy this slides are . Thank you
Supply chain management in indian automotive industry complexities, challeng...ijmvsc
The Indian automotive industry, comprising vehicle and component manufacturers, has grown steadily
since the economic liberalization of the early 1990’s. The arrival of major global auto companies has
galvanised the domestic sector into adopting Supply Chain best practices. This has enhanced
competitiveness leading to a quantum growth in exports. However, the Indian automotive industry has to
operate in an unique environment further posing challenges to the already complex automobile supply
chain. Therefore, a need is felt to continually study supply chain practices in this sector from a
contemporary, practitioner’s viewpoint in order to identify key factors of differentiation which would
ultimately provide competitive advantage. This paper seeks to understand the present status, complexities
and challenges facing the Indian automobile sector. It examines trends such as visibility and innovation,
collaboration and supply networks and evolving leadership roles impacting supply chain effectiveness.
Strategies for overcoming challenges are presented as also a framework for further study and analysis.
SUPPLY CHAIN MANAGEMENT IN INDIAN AUTOMOTIVE INDUSTRY : COMPLEXITIES, CHALLEN...ijmvsc
The Indian automotive industry, comprising vehicle and component manufacturers, has grown steadily since the economic liberalization of the early 1990’s. The arrival of major global auto companies has galvanised the domestic sector into adopting Supply Chain best practices. This has enhanced competitiveness leading to a quantum growth in exports. However, the Indian automotive industry has to operate in an unique environment further posing challenges to the already complex automobile supply chain. Therefore, a need is felt to continually study supply chain practices in this sector from a contemporary, practitioner’s viewpoint in order to identify key factors of differentiation which would ultimately provide competitive advantage. This paper seeks to understand the present status, complexities and challenges facing the Indian automobile sector. It examines trends such as visibility and innovation, collaboration and supply networks and evolving leadership roles impacting supply chain effectiveness. Strategies for overcoming challenges are presented as also a framework for further study and analysis.
Asia-Pacific countries have contributed to growth of the global automobile sector. Developing Asia Pacific region will contribute 62.2% of auto and auto components sector growth for the period 2015-19. The quantitative growth in this region is expected to reach 101mn units in 2017 at a CAGR of 5%. India is a significant contributor from this region with a potential to become the 4th largest automobile producer by 2020. Automobile sector contributes 7.1% to the Indian GDP and was more than 45% of manufacturing GDP in FY14. Karnataka is the 4th largest state in automotive production with output of USD 2.8 bn, contributing 8.5% to national sector output. The automotive industry provides employment to more than 55,000 workers in the state of Karnataka.
An Analysis of Automobile Industry of India as a Market StructureMuhammad Anowar
Automobile industry is a symbol of technical marvel by human kind. Being one of the fastest growing sectors in the world its dynamic growth phases are explained by nature of competition, product life cycle and consumer demand. Today, the global automobile industry is concerned with consumer demands for styling, safety, and comfort; and with labor relations and manufacturing efficiency. The industry is at the crossroads with global mergers and relocation of production centers to emerging developing economies.
Asia has become the major consumer as well as supplier of automobiles. India is concentrating on Middle East and south Asia beside traditional developed country destinations. With the gradual opening up of the component sector, now the challenge is for individual governments to support the development of domestic critical component and sub-system suppliers through, improvement in the investment environment, stronger patent regimes and incentives for R&D.
In India Automotive industry is growing at an alarming rate. It
is the engine of growth for the economy. It is amazing to
know that this industry provides employment to 1.5 million
people. It contributes 3.8% to national GDP and 25.6% to
manufacturing GDP.
Sectoral trends patterns and prospects of auto component industry in india
1. Information and Knowledge Management www.iiste.org
ISSN 2224-5758 (Paper) ISSN 2224-896X (Online)
Vol.4, No.7, 2014
1
Sectoral Trends Patterns and Prospects of Auto Component
Industry in India
Dr. Tarun Tayal*
Dr. Amit Sharma & Dr. Renu Sharma
Anand Engineering College Agra, (India)
* E-mail of the corresponding author: taruntkt@rediff.com
Abstract
The paper highlights the growth of Indian Automobile Industry, particularly to the Indian Auto Component
Industry relating with Investments and Foreign Direct Investment in the equity inflows, drawing comparison
with the developments and growth of Automobile Industry domestically and globally. The growth of Indian
Auto Component Industry in the first decade of the twenty first century is phenomenal. The Industry transformed
gradually in stages from serving just Indian market, majority to replacement market, to global OEMs and
replacement market. Now, the Auto Component Manufacturers Association (ACMA) has significance for global
recognition and has a positive impact on GDP. It has played a vital role in the growth of Indian Automobile
sector in last few years and in future as per Automotive Plan 2006-16, and Automotive sector five year plan
2012–17, as projected by Department of Heavy Industry. The growth of this sub sector has a pivotal role
in the developments and growth of Indian Automobile Industry and economy rather it is dependent on
Automobile Industry growth, locally and worldwide.
Keywords: OEMs, ACMA, ACT.
Introduction
The Indian automobile industry is capital and technology intensive with high level industries, leading to making
a strategic industry to the Industrial economy as a whole. The automotive industry contributes 7% contribution in
the total GDP of India. The auto component sector is highly diverse and vibrant, one of the key downstream
linkages to the Indian Automobile Industry and ending FY 2012, the production turnover being Rs.2063 billions
by manufacturing all the key components required for Vehicle building. In 1980s it has followed a planned
growth process and has given a major fillip to the development of Indian Auto Component sector. The
initial part of development of Indian Auto Component Industry is primarily due to the implementation of
Phased Manufacturing Program (PMP) as per the Govt. of India policy enabling the auto component industry to
developing and creating highly capable, competent and quality conscious components. This followed by Auto
Policy 2002 with a Vision: To establish a globally competitive automotive industry in India and to double its
contribution to the economy by 2010. Accordingly automobile equipment manufacturers (OEMs) and Auto
component manufacturers have made a significant contribution to the Indian economy as per the policy
objectives. It has reflected in the growth of Indian Auto Component Industry from FY 2002 to FY 2012 in terms
of earnings and encouraging capital investments domestically and globally. Indian Auto Component Industry
covers a wide spectrum of industries, as rubber, iron and alloy steel, plastic, oils and lubricants, fabrication tools,
safety gadgets, air conditioner, radiators, moldings, battery industry, electrical fittings, interior designing &
furnishings, sheet metal fabrication, shocker manufacturers etc, which covers basic industry and white goods.
Automotive Component Manufacturers Association (ACMA) of India
Earlier, it was registered under the section 21 of Companies Act 1956 and it has been established under the
name, All India Automobile and Ancillary Industries association (AIA and AIA) based on the necessary
approvals. Since 1982, it has been changed and named as Automotive Component manufacturers Association of
India (ACMA) under section 23(1) of the Companies Act 1956.
The Automotive Component Manufacturers Association of India (ACMA) is the apex body representing the
interest of the Indian Auto Component Industry. It is an ISO 9001:2008 certified Association. The main
objective of ACMA is, being active involvement in trade promotion, technology up-gradation, quality
enhancement, collection and widespread discussion of information which made it a vital channel for this
industry’s development. It has affiliation and membership with other bodies such as, ASDC, ASSOCHEM,
ATMA, CII, FICCI, SIAM, etc. ACMA plays vital role in national economic development and promote business
with International alliance. Its charter is to develop a globally competitive Indian auto component industry and
strengthen it.
ACMA is represented on a number of panels, committees and councils of the Government of India through
which helping in the formulation of various policies pertaining to Indian Automobile Industry as a whole.
The Auto- Component Industry relates to supplies to OEMs and after-market services comprising of Tier 1, Tier
2, and Tier 3. Tier 1 auto-component manufacturers are the members of the Automobile Component
Manufacturers Association – ACMA. The Indian Auto Component industry is classified as organized and
2. Information and Knowledge Management www.iiste.org
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Vol.4, No.7, 2014
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unorganized players. The organized sector caters essentially to OEMs and to some extent in after-market dealing
in the manufacture of high value-added precision engineering components.
The unorganized players are mainly catering to replacement market or aftermarket dealing in lower value-added
components. This industry classified in a 3 tier structure is as follows:
Tier 1 are involved in integrated systems and key enablers to OEMs and manufacture multiple auto components,
Tier 2 supply auto components to Tier 1 suppliers and finally, Tier 3 use traditional method of manufacturing
involved in raw material and single component manufacturers to Tier 2.
In some extend, OEMs themselves are in Tier 1 group because of quality, technology and brand monopoly of
the component, established with the brand equity and capital investments being high.
ACMA members being small in numbers comparatively but they manufacture and supply about 77% of the Auto
Industry till FY 2010, which shows forms a majority and importance of the total auto component output in the
organized sector. One of the developments of ACMA is to formation of ACT, Centre of Technology for
Manufacturing Excellence in 2001, as a division of ACMA to improve Productivity and Quality Programs for
Operational Excellence.
Commendable approach of ACT for operational excellence is - a group of companies join to learn,
understand, practice and achieve together with the expert guidance of mentors and expertise by a well
documented practices and systems for sustenance. It is structured to impart knowledge to establish India as a
main player for manufacturing quality auto components in economy of scale by focusing on minimize wastage,
maximize salvage, value addition and leveraging the available resources in a most efficient manner.
Auto Component Manufacturing Growth
Product quality, cost and efficient distribution are the key factors in the growth of this industry. The
achievements with respect to various certifications obtained are worth to begin-with as indicated in term of
quality improvement. A majority of them obtained is ISO 9001 certification which deals in Process oriented and
System development leading to achieving the end result as per the set objectives. Apart from Auto Policy 2002,
the other major favorable measures in aiding growth are - attracting foreign direct investment, technology
modernization fund focusing to SMEs by Auto Manufacturing Policy 2006-16, and The DHI and PE
(Department of Heavy Industries and Public Enterprises) creating a fund of USD 200 million fund to modernize
the auto components industry by providing a subsidized interest loans and investment in new plants and
equipment, and provide export benefits to intermediate suppliers of auto components against the DFRC (Duty
Free Replenishment Certificate). The distinct and great achievement is relating with Deming awarded by Japan
and India is the first country to obtain this award for outside Japan established organizations in this sector
followed by largest in number.
As SWOT analysis of this industry in India is - The Strength lies in 1) Globally cost competitiveness, being low
manufacturing cost 2) Strict quality controls 3) Access to latest technology whereas the Threat are 1) Essentially
cheap imports from other low cost countries such as China, Thailand, Taiwan etc. 2) Continued pressure on
prices from OEMs. 3) Lack of design capabilities with the domestic auto component manufacturers is leading
major OEMs in importing the requirements for their new launches and variants.
Investments
The Cumulative Foreign Direct Investment (FDI) in normal equity inflows in exclusively Auto ancillaries/parts
from January 2000 to December 2010 is US$ 635 millions (Rs. 2857 crores) and during the same period
exclusive investments in passenger car segment is US$ 3,008 millions (Rs. 13,516 crores). Thekey domain of
growth in automobile and auto component industry in India held 1995, post liberalization and Auto Policy 2002.
Table- 1 Indian Auto Component Industry Investments FY 2002 to FY 2012
Financial Year
Ending
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Investments
(Rupees in
Crore)
10700 12500 14500 16800 19500 24000 7560 460 8024 9120 –10260 7760 –9215
Percentage
Change (%)
16.8 16 15.9 16.1 23.1 -68.5 -93.9 1644.3
Source - ACMA Annual Reports of FY 2007 to 2012
The surge in Investments in Indian Auto Component Industry is remarkable, majority are in Tier 1 and few in
Tier 2 sector and most of them are members of ACMA. The Table 1 highlights the actual Investments in Auto
Component Industry to match with the demand of automobile manufacturers (OEMs). There are a
gradual increase in investments in Auto component sector till FY 2007 as the installed capacity increased at
OEMs and there is a definite demand of vehicles as increasing in purchasing power (high employment) and
easy Finance availability; Auto – Finance various schemes launched by private and Govt. banks. The
significant factor to be noted is the capital investment taking place every year from FY2002 in this sector of
automobile industry. There is a decrease in actual amount of investments in FY 2008 and FY 2009 because of
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Vol.4, No.7, 2014
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worldwide economic meltdown particularly in USA and EU. Thereafter, the investments have phenomenally
increased to match the growth in India and demand abroad.
The trends in foreign direct investment in automobile sector shown that there is a continuous increase of
investment in this sector after 2005 onwards. Major investment came from Japan (27.59%), Italy (14.66%),
USA (13.88%) followed by Mauritius (7.77%) and Netherlands (6.91%). In India Mumbai, New Delhi and
Ahmedabad received major chunks of investment i.e. 36.98%, 26.63% and 9.47%. The total numbers of
approvals for automobile industry have been of the order of 1611 with an equity participation of US$ 6.1 bn,
which is 7.01% of the total investment. Automobile industry sector ranks 5th in the list of sectors in terms of
cumulative FDI approved from August 1991 to Dec 2008. Out of 1611 numbers of foreign collaborations
approved 734 are technical and 877 are financial in nature. The major Indian companies which received highest
percentage of FDI inflows in automobile industry are Escorts Yamaha Motor Ltd, Yamaha Motors India Pvt. Ltd,
Punjab Tractors Ltd., Yamaha Motor Escorts Ltd, Endurance Technologies P. Ltd, General Motors India Ltd,
and Fiat India Automobile P. Ltd.
Production
There is a remarkable growth in production turnover of all supplies by auto component manufacturers. The size
of the auto components industry has grown principally due to two reasons i. the automobile manufacturers have
grown and ii. The replacement market also increased in tune with that. The major part of Tier 1 produce is for
the demand of OEMs and only a small portion for replacement market. In value terms it is Rs. 216.02 billion in
FY 2002 and Rs.2063 billion in FY 2012 leading to CAGR of 25.3%. During the same period the total
Automobile Vehicle production (in number) grew from 5,316,302 in FY 02 to 20,366,432 in FY 12 with a
CAGR of 14.4% which is the prime reason for the growth of auto component industry. The Indian Auto
Component Industry manufactures a wide range of products and Exhibit 2 displays the share under each of these
categories. It covers i. Body and Structural parts ii. Engine and exhaust iii. Electricals and electronics iv. Interior
accessories v. Suspension and brakes vi. Drive transmission and steering parts. This constitutes about 77% of the
total production requirements.
Table-2 Auto Component Industry - Actual Production Turnover changes Year On Year
Financial Year Ending 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Percentage Change (%) 18.2 20 25.6 38.7 20.8 65 - 0.7 28.4 34.2 13.3
The actual Automobile Vehicle Production at OEMs from FY 2002 to FY 2012 comparing along with Table-4
indicating the production trend in value terms at Auto Component Industry and this proves a point that both are
related and are in the same growth. This proves a point that auto-component industry is closely linked to the
growth of automobile industry as a substantial quantity produced by auto component industry is
supplied to OEMs.
Exports and Imports by Auto component industry
Exports: The Indian Auto Component Industry is one of the few sectors in the economy that has a distinct
global advantage in terms of Cost and Quality. Indian auto-components industry is being considered for
outsourcing by developed countries owing to its low cost of production and quality product. In the FY 1998 the
Auto Components export from India was meager rupees 1303.5 Crores compared to exports of Rs. 33,485 Crores
in FY 2012, leading to a Compounded Average Growth Rate (CAGR) of 26%. One of the key factors being the
increasing cost of automobile manufacturing in the Foreign Countries, coupled with the benefits of sourcing
from India at a low price – savings to OEMs is about 25%. The majority 75% – 80% of export during FY 06 to
FY 11 is catering to Asia, Europe and North American markets; a vast range of automotive chassis and
components. This reflects one of the stated AUTO Policy 2002 Objectives to promote a globally competitive
automotive industry and emerge as a global hub for auto components.
Imports: Entire period of this study duration, the imports content important part of auto components is gradually
increasing and in value terms more than exports. The Custom Duty is same across all the areas in each Financial
Year. In value terms import of auto components, it is Rs. 3164 crores in the year 2001–02 and Rs. 51441 (E) in
the year 2011–12 with a CAGR of 31.2%. Also, year on year basis % increase is in double digit but for FY 2010
reason being recession in Europe and USA markets.
Table-3Auto Component – Imports (Rs. Crores)
Financial Year
Ending 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Imports
(Rupees 3164 4256 6499 9504 12115 15974 26040 31280 30680 38760 51441
Percentage
Change (%) 34.5 52.7 46.2 27.5 31.9 6 20.1 -1.9 26.3 32.
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Vol.4, No.7, 2014
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Table-4 Auto – Component Industry Statistics (US$ Billions)
Category 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 010-11 2011-12
Turnovr
Growth rate %
8.7 12.00 15.00 18.00 18.40 22.00 39.9 43.5
29% 38% 25% 20% 2% 20% 53% 9%
Export
Growth rate %
1.69 2.47 2.67 3.52 3.80 3.8 5.2 6.8
34% 46% 8% 32% 8% Nil 37% 31%
Import
Growth rate %
1.9 2.48 3.6 5.22 6.80 8.16 8.62 10.1
33% 30% 45% 45% 30% 20% 6% 17%
Investmet
growth rate %
3.75 4.40 5.4 7.20 7.30 9.0
NA21% 17% 23% 33% 1% 23%
Imports as a % of turnover 22 21 24 29 37 37 22 23%
Exports as % of turnover 20 21 18 20 21 13 18 16%
Source: ACMA Statistics
Employment
In 2009, the direct and indirect employment in Indian automobile Industry is indicated as over13million and of
these 8 to 9 million are in unorganized sector and indirect employment. Direct employment includes
personnel working with automobile OEM’s and Tier 1 manufacturer which accounts about 30%). The balance
of 70% employed in Tier 2 & 3 of auto component manufacturers comprising of over 10,000 in unorganized
sector and indirect employment includes essentially in manpower serving in the industry and market side
enablers. The Indian automobile industry provides direct and indirect employment to over 17 million1 people
as on 2012. Between these three years, that is, 2009 to 2012, there is an increase of over 4 million in direct and
indirect employment in Indian Automobile Industry showing the potential of employment generation in
automobile industry.
Future Prospects of Auto Component Industry in India
The future of Indian Auto Component sub sector is very bright. Essentially Capital investment became a
necessity to make domestic industry more competitive with regards to high technology component development.
To assist domestic auto component manufacturers, to access finance at reduced rate of interest in modernization
or up-gradation or technology acquisition leading to become more competitive, a new scheme titled as
“Technology Up-gradation and Development Scheme (TUDS) is proposed by the working group on
Automotive Industry for the 12th
Five Year Plan 2012-17 under Ministry of Heavy Industries and Public
Enterprises. This envision the creation of ‘Auto Component Technology Development Fund (ATDF)’ and
would be facilitated to finance 50 percent of the project cost by way of low interest loan with an interest subsidy
of 4% to be in this corpus fund. The estimated investment required by the auto component manufacturers in the
next five year period 2012–17 is Rs.15,000 crore; of which Rs.7,500 crore will be contributed by the auto
component industry and the other part Rs.7,500 crore will be financed through low interest loans from
Financial Institutions with 4% subsidy proposed to be borne by the Government of India.
The Government of India has initiated a National Automotive Testing Research & Development Infrastructure
Project (NATRIP) for automotive testing and approved by allocating Rs.4.88 billions in the Union Budget 2012-
13. To promote technology innovation in this sector, in the Union Budget for the Financial Year 2012-13 is
increase in the weighted tax deduction is extended with respect to in-house R & D expenses from 150% to 200%
in the five year period till 2017.
Challenges
In spite of that a bright future and prospects of auto mobile component industry, it is facing a lots of challenges
and difficulties of infrastructure and policy matters such as-
FICCI 2010 FDI survey found that there are three main challenges of foreign investors lie in procedural delays,
the tax regime and labour laws. Recommendations of survey are:
a) Rationalization of tax structure b) Reducing Bureaucracy c) Improving infrastructure facilities
d) Rationalizing labor laws e) Liberalizing employment visa rules
Public transport is a particular infrastructure challenge, for example: Infosys spends US$ 5 millions a year to
transport its 18000 employees to work place. FICCI survey also suggest that power supply also present a genuine
challenge.
Other Challenges includes income disparities, bureaucracy, environment al impact of development and
corruptions
5. Information and Knowledge Management www.iiste.org
ISSN 2224-5758 (Paper) ISSN 2224-896X (Online)
Vol.4, No.7, 2014
5
Conclusion
The Indian Economy is vibrant among all the developing countries, especially in ASIAN region. The growth
phase of Indian Auto Component Industry is applaudable in this duration from 2002 to 2012. The various
policies of Govt. of India were favorable and encouraging, in fact, in some extend these acted as an accelerator
to improve in exports and to expand the installed capacity. Also, Quality Certifications have significantly
contributed to the growth of the industry, companies from abroad preferred Indian companies. Also, the Indian
auto component industry possesses competitive advantage due to its high quality produce, efficient channel of
distribution, dependable and low cost capabilities. In future, this might get isolate because of increase in input
cost. The industry is already facing a major threat with respect to imports, which is presently at 30% of the total
industry requirements. The creation of Auto Component Technology Development Fund (ATDF) to contribute
in further development and to achieve targets as per Automobile Manufacturing Policy 2016 and Automotive
12th
Five year plan is significant contribution from Govt. of India point of view.
The level of indigenization is being increased in phased manner to maintain low-cost without compromising on
quality aspect by Global OEMs present in India. In a way, to increase the local sourcing is becoming a necessity
for global OEMs because of depreciating rupee value leading to inflating import bill on auto components. In the
FY 12, for Indian OEMs indigenization is 90% and foreign OEMs it is around 65 to 70%. By the changes in the
Customs Duty structure by Govt. of India in The Union Budget FY 2012-13, the foreign OEMs may resort to
manufacture locally by investing in technology up-gradation, leading to increase locally produced auto
components in the finished product.
There are certain major factors to be viewed by the industry players to reach targets as per Auto Manufacturing
Policy 2016, 12th Five year plan and Vision 2021. They are primarily monitoring a check on the raw material
cost which accounts 55% approximately of the total cost of product, followed-by labour cost about 12%,
availability of skilled labour requirement and reviewing and amendment in the labour laws by State and Central
governments to balance on either side.
References
ACMA – www.acmainfo.com/acma_memorandum.pdf - Memorandum and Articles of Association (1959–
1982)
ACMA – Annual Report (2011-12)
IBEF Report - http://www.ibef.org page no. 6, (2012)
ACMA – ACT (2012)
IBEF Report - http://www.ibef.org page no. 17, (2012)
MRB – Market attractiveness of Auto Component Business in India (January 2009), Dun and Bradstreet
https://www.dnb.co.in/ (2011)
ACMA - Indian Auto components industry – Growing Capabilities and Strength (June 2011)
DIPP – http://dipp.nic.in - SIA Newsletter January (2011)
ACMA Annual Reports (2007 to 2012)
ACMA – Indian Auto Components Industry – An Overview (2010)
ICRA review and Industry source June (2011)
ACMA, SIAM and ATMA – Study by NCAER (2000) on projected rates in the next two five yearplans (2002 –
2007 and 2007 - 2012) and ACMA Annual Reports (2007 to 2012)
SIAM industry statistics – www.siamindia.com - (2007– 2012)
Auto Component off-take by Automobile Industry Segment – CRISIL Research (2011)
Indian Automotive Industry: at the cross roads – EXIM Bank of India (2008)
Indian Institute of Foreign Trade, experience of Indian Automotive Sector - (2009)
Ministry of Finance, Government of India, Gazette Notification (2011, 2012)
Working Group on Automotive Sector for 12th
. Five year plan, Department of Heavy Industry, Ministry of
Heavy Industries and Public Enterprises (2012–17)
ACMA – Auto Component Industry Statistics, January (2013)
ACMA and CARE research, December, (2012)
ACMA – Joint study with M/S J D Power Asia Pacific “Insights into Supplier -OEM relationship: a
Benchmarking Study (2011)
Sagar Renuka & Lalita – “Sectoral Trends and Patterns of FDI in India” International journal of Marketing,
Financial Services& Management research(2013)Vol.2 No.7
Bhasker Velury Vijay – “FDI in Auto mobile Industry:Impact on employement Generation” research journal of
management science(2013) vol.2(2)
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