The Indian auto component industry has taken an ambitious target of reaching $100 billion in the next seven-eight years (currently at $21.2 billion in FY24) in exports. For achieving this, the country needs to position itself as a hub for both classic and emerging auto components, Automotive Component Manufacturers Association of India (ACMA) said on Tuesday.
The road to $100-billion exports will hinge on two critical factors — a 2-3x growth in classical vehicle components (ICE and carry-over components to EVs) and building an exports-ready foundation in electrification and electronification opportunities, the latest report by Boston Consulting Group (BCG) and ACMA said.
The report titled, “Revving Up Exports: The Next Phase of Export Growth for the Auto Component Industry,” also said India can potentially add another $40-60 billion in incremental exports by prioritising 11 product families including engines, gears, gearbox parts, rubber brakes, axles suspension, wiring harness and motors, with focus on the US and Europe markets.
Second, India can also capitalise on emerging electric vehicle (EV) and electronic value chain through localisation, to tap into additional $15-20 billion exports in components such as battery management systems, telematics units, instrument clusters and anti-lock braking system, it said.
“We have not only achieved a positive trade balance, but for auto-specific use cases, the surplus is even more pronounced, reaching around $0.5-1.5 billion. We are committed to sustaining this growth trajectory and have set an ambitious target of $100 billion in exports ahead,” Shradha Suri Marwah, President, ACMA, said.
Turnaround in exports
India’s auto component exports that reached $21.2 billion in FY24, is a significant turnaround from a $2.5-billion deficit in FY19 to a $300-million surplus, she said.
Global auto component trade stands at $1.2 trillion, with the US and Europe as top importers, the report highlighted.
The report also said that as geopolitical dynamics evolve, global original equipment manufacturers (OEMs) are reassessing their supply chains and manufacturing strategies, presenting India with an optimal opportunity to establish itself as a top destination for global OEMs and Tier-1s.
“Encouraging two-three global OEMs to establish manufacturing bases in India can serve as an anchor – helping the domestic auto component players to gain a deeper understanding of global OEM requirements, integrate more seamlessly into their supply chains, and enhance India’s position in the global auto component market,” Vikram Janakiraman, Managing Director and Senior Partner at BCG, said.