Indian automotive suppliers only account for 1% of overall global exports (worth $10 billion), but things are looking up. The Auto Component Manufacturers Association (ACMA) in India, and McKinsey, an American management consulting firm, have released a joint report entitled, ‘Capturing the Global Opportunity, the next imperative for the Indian auto component industry’, which suggests plenty of scope for growth ahead.
The report says that by 2020, the potential for exports from India could rise to $40 billion, over four times what it is today. Globalisation is a key issue in the component industry, and this is helping to raise India’s profile, as well as increasing the country’s international presence over the next few years.
The report suggests that there are contributing factors driving the likely increase in export activity: technologies and market diversifications for margin resiliency; globalising OEMs with suppliers following them; the increasing aspiration of emerging market suppliers looking to access new markets; the maturing of low-cost countries as export locations; and a shift towards large global suppliers and platform consolidation.
The report predicts that Indian suppliers in the global top 100 could increase from zero to five by 2020 and that revenue from overseas assets could grow from the current figure of $6 billion, to $20-22 billion. This is based on OEM surveys, market comparisons, and supplier surveys.
The past year has been a difficult one for India’s automotive industry in all aspects, not just for its logistics and supply chain sectors. Companies have had to streamline processes, reorganise business strategies, and reevaluate processes, all while competing with competitors in other markets.
However, the report states that India’s manufacturers are looking at international markets more readily, and have a stronger desire to become players in the global automotive supply chain. Coping with a particularly difficult year has helped automotive component manufacturers to develop and become more effective at competing on a global scale.
At ACMA’s recent 54th Annual Session and National Conference in New Delhi, its president, Harish Lakshman, said: “The auto industry is a critical cog in the wheel of the Indian manufacturing sector. As we aim to develop India as a global manufacturing hub we see a huge export potential in our domestic auto industry. This is the right time to invest in technology, innovation, training and resources to build the future.”