Sunday, January 3, 2016

Make in India - Automobile Components - $20 Trillion Economy Opportunity

The growth of global OEM sourcing from India and the increased indigenisation of global OEMs is turning the country into a preferred designing and manufacturing base.

November 2015

Revenues of the Indian auto-components industry grew by 11 per cent over the past year to Rs 2.34 lakh crore (US$ 34.7 billion) in FY 14-15.

According to the Automotive Component Manufacturers Association of India (ACMA), the Indian auto-components industry is expected to register a turnover of US$ 66 billion by FY 15–16 with the likelihood to touch US$ 115 billion by 2020  and US$ 200 billion by 2025. In addition, industry exports are projected to reach US$ 12 billion by FY 15–16 and add up to US$ 30 billion by 2020 further rising to US$ 80 billion by 2025. The sector’s contribution to manufacturing GDP is expected to double from 5 per cent in 2015 to 10 per cent in 2026.

President's Message by President ACMA - Mr. Arvind Balaji (accessed on 3 Jan 2016 from the site of ACMA

The automotive industry is an engine of growth for the Indian economy. The auto component industry contributes 25.6% to the manufacturing GDP and 3.8% to National GDP, providing direct employment to 1.5 million people.

Over the years the component industry has adapted well to the changes in the policy & regulatory environment and the needs of its customers. To realise their ambition of graduating from being a build to print to one that is art to part, the auto component manufacturers must focus on R&D to help generate IP in India and in the process, create greater returns than the cost of capital to make India an attractive destination for investments.

The ‘Make in India’ campaign of the government has enthused the entire manufacturing sector. Focus on ease of doing business, implementation of GST and other reforms augur well for the component manufacturing industry.

While the last year had significant challenges for the sector, the component industry fared reasonably well with exports scaling to USD 11.2 billion and an overall turnover of USD 38.5 billon. Aimed at an holistic growth model for the automotive industry, The Automotive Mission Plan (AMP 2026) has set a target of a turnover of USD 223 billion by 2026 for the auto component sector backed with strong exports ranging between USD 80 -100 billion.

This year we have adopted ‘Make Quality & Technology in India’ as our theme and we would endeavour to focus on strengthening our capabilities for new product development, improving quality standards, evolving our technology for meeting the evolving emission and safety standards, upgrading people skills to support domestic and global expansion of OEMs, building auto-electronics manufacturing capabilities, embracing digital technology in manufacturing to transform productivity thus enabling our Industry and India become an attractive destination for investments.

This calls for a more collaborative approach between the various stakeholders of the value chain i.e. component manufacturers, OEMs, Machine Tool Suppliers, the Raw Material industry and the Government. If we have to grow from being locally competitive to globally competitive, our relationship must graduate from being transactional to a symbiotic one.

I am confident that the Auto Components Industry will achieve the targets of the Automotive Mission Plan 2026 and will make due contribution in helping develop India into a globally competitive manufacturing nation, delivering quality products, made in India for the World.


Some of the major investments made into the Indian auto components sector:

Everstone Capital, a Singapore-based private equity (PE) firm, has purchased 51 per cent in Indian auto components maker SJS Enterprises for an estimated Rs 350 crore (US$ 54 million).
ArcelorMittal signed a joint venture agreement with Steel Authority of India Ltd (SAIL) to establish an automotive steel manufacturing facility in India.
German auto components maker Bosch Ltd opened its new factory at Bidadi, near Bengaluru, which is its fifth manufacturing plant in Karnataka. The company has also signed a memorandum of understanding (MoU) with Indian Institute of Science (IISc), Bengaluru with a view to strengthen Bosch’s research and development in areas including mobility and healthcare thereby driving innovation for India-centric requirements.
French tyre manufacturer Michelin announced plans to produce 16,000 tonnes of truck and bus tyres from its Indian facility this year, a 45 per cent rise from last year.
Amtek Auto Ltd acquired Germany-based Scholz Edelstahl GmbH through its 100 per cent Singapore-based subsidiary Amtek Precision Engineering Pte Ltd.
MRF Ltd plans to invest Rs 4,500 crore (US$ 679.5 million) in its two factories in Tamil Nadu as part of its expansion plan.
German luxury car maker Bayerische Motoren Werke AG’s ( BMW ’s) announced it will start sourcing parts from at least seven India-based auto parts makers in response to promote ‘Make in India’.

May 2015

Make in India Video

USD $115 billion by 2020.



Government Regulation and Policies

The Government of India’s Automotive Mission Plan (AMP) 2006–2016

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