The Indian Automobile Market Today
According to the Indian Auto Components Industry Analysis, the Indian automobile market is expected to be among the largest in the world and will account for more than 5 per cent of the global vehicle sales. It is due to the persistent drive by the automotive manufacturing companies in India that this amazing success story has been written in such a short time.
The automotive component manufacturers, similarly, can take credit for the fact that the sector has also shown a robust growth. The turnover is anticipated to reach US $ 115 billion by FY 2021 from US $ 35.1 billion in FY 2014. It is expected that the value of exports by auto component manufacturers could account for as much as 26 per cent of the market by 2021.
The Result of Supportive Government Policies
The Auto Policy2002 was a very supportive policy for the Indian automotive sector and so were the Automotive Mission Plan for the years 2006 till 2016 and the National Automotive Testing and R&D Infrastructure Projects also known by its acronym NATRiPs. All these policies ultimately served to help the Indian automotive components’ industry in achieving a fair amount of growth. Today India has reached a level where it can be seen as one of the upcoming global hubs for the sourcing of automotive components. It is due to the cost effectiveness of the manufacturing base that has made it possible to keep the cost lower by 10-25 per cent relative to operations in Europe and Latin America.
What gives an added impetus to the industry is India’s geographical proximity to important automotive markets such as Europe and the Middle East.
According to available reports the following investments have been announced for the automotive component sector in India:
- The French maker of automotive parts Valeo plans to invest US $ 100 billion in India in the coming two to three years.
- The Canadian automotive parts supplier Magna plans to open 3 new plants in India by 2019.
Other Growth Drivers of the Indian Automotive Components Market
The automotive sector is one of the fastest growing and largest manufacturing sectors in India. With a turnover of US $13 Billion, the automobile industry in the country employs around 19 million people, directly and indirectly, according to a report. Today India is ranked as the 11th largest passenger car producer in the world. In the category of motorcycles, it is the largest manufacturer while in the category of scooters it is the second largest manufacturer. It is due to the liberalized market that several new JVs have evolved. This has resulted in around two dozen global auto manufacturers setting up shops in India.
The Indian market for automotive components is now worth around US $ 45 billion, and it is growing at a staggering pace. According to forecasts, although the rate of growth will probably remain moderate, it will still remain in double-digits at approximately 11%. One of the major strengths driving this kind of growth is owed to the inherent competitive expertise of India in the following areas:
- Wiring harness
- Machining and
- Electronic fuel injectors.
The other important driver that has fueled this growth is the cost of skilled labor, which is one of the lowest in the world. In the case of engineers too India produces more than 400,000 engineers per year.
The Indian automotive components sector has been growing steadily riding piggy back on the growth of the automotive industry in the country in general. Foreign investments, technological prowess, favorable government policies, advantageous geographic location and a competitive costing structure are some of the factors that have been driving the success story.
About The Author
Varun is an Aerospace engineer working in Dynamatics Technology. The largest producers in of hydraulic pumps, automotive components, aerospace components and systems in Europe and India. Connect to know more.