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April 2008


The industry is poised to jump from exports of €1.416 billion in 2008-09.5 billion were exported by Indian companies. a thriving domestic automobile industry and competitive costs. global auto majors are rapidly ramping up the value of Comps they source from India. Cummins International. AUTOCOMP SECTOR IN INDIA The world's top car makers turn to India for the nuts and bolts of their vehicles.347 billion in 2004-05 to €4. Volkswagen. the Indian automobile Comps industry has emerged as one of India's fastest growing manufacturing sectors. In 2006. Comps worth €1. A number of them source critical Comps from India. with North America a close second at 26 per cent. and a globally competitive one. MAN (trucks) and JCB (earthmoving equipment) amongst others. more than a third (36 per cent) of Indian AUTOCOMP exports head for Europe. Riding this success. According to the AUTOCOMP Manufacturers Association of India. with engine parts making up nearly a third of all exports:  Engine parts (31 per cent)  Drive transmission and steering parts (19 per cent)  Body and chassis (12 per cent)  Suspension and braking parts (12 per cent)  Equipment (10 per cent)  Electrical parts (9 per cent)  Others (7 per cent) The India Advantage Steered here by the country's high engineering skills. established production lines. 75 per cent of which were bought directly by car companies. Economic Survey 2006-07 says: 2 . The Indian AUTOCOMP industry is likely to almost double to € 14 billion by 2009 and reach about €29. BMW. Bosch. Its globally competitive AUTOCOMP manufacturing sector has been much in demand with global auto majors. and capitalizing on the spiralling demand of domestic AUTOCOMPanies.94 billion by 2014. The original equipment manufacturers (OEMs) include firms like General Motors. Ford Motor Company.

Hitachi Ltd. plans to open a new manufacturing facility in India.213 million last year to its operations in South Africa.  Dubai-based auto ancillary major Parts International Company has plans to invest approximately € 2. Over 20 OEMs have set up their International Purchase Offices (IPOs) in India to the Comps. Fiat has exported Comps worth € 6.32 to €7. like 3 . India enjoys a cost advantage with regard to castings and forgings.The turnover of the AUTOCOMP sector has grown from €2.75 million to its global production units by 2010. which belong to the category of high Accepted Quality Level (AQL). is planning to start AUTOCOMP manufacturing in India when its OEMs-Isuzu Motor and Nissan Motor--start manufacturing their cars in India. India's competitive advantage does not come from costs alone. which contribute more than 85 per cent of India's production.7 million in its Indian subsidiaries over two years.  Fiat India is taking baby steps in becoming a global sourcing hub for Comps. This includes setting up a manufacturing facility meant to service exports to CIS and SAARC countries. The manufacturing costs in India are 25 to 30 percent lower than its western counterparts.the Bosch flagship in India. but from its full service supply capability. Bulk of the investment will be in Motor Industries Co Ltd (Mico) -. Big players go high-tech The AUTOCOMPs industry in India is dominated by around 500 key players.  GKN Driveline. an arm of UK-based AUTOCOMP company GKN.  Japanese electronic major.  General Motors has decided to increase sourcing of Comps from Indian suppliers and intends to ship parts worth € 748.7 million in India over three years.347 billion. In 2005-06. The major destinations of export for this sector are US and Europe.  Auto parts maker Robert Bosch of Germany will invest € 150. the sector's exports grew by 28 per cent to reach €1. This number is expected to double by the year 2010. Some of the largest. Investments Global auto majors and domestic giants are pulling out their purses and putting their money where the production lines are.487 billion between 1997-98 and 2005-06.

the Indian AUTOCOMPs market was dominated by supplies to the aftermarket. Government of India. The engineering export promotion council under the aegis of Ministry of Commerce and Industry. There is no local content regulation in the auto industry. Government initiatives The Government of India allows automatic approval for foreign equity investment up to 100 per cent for the manufacture of AUTOCOMPs. In the 1990s. Japanese. Rico Auto Industries.  Setting up of the National AUTO Testing and R&D Infrastructure Project (NATRIP) at a total cost of €290. as automobile makers seek to manage fewer vendors and trim costs. it is a very different story.85 million for enabling the industry to usher in global standards of vehicular safety. Indian automobile Comp manufacturers supply 75 per cent of their exports to Tier 1 OEMs and only 25 per cent to the aftermarket. Amtek and Mahindra & Mahindra are scaling up from producing individual Comps to making assemblies and systems. Korean and European  Appropriate automation has led to economically attractive production costs  Flexibility in small batch production 4 . Bharat Forge. Indian Comp suppliers have displayed a growing capability to cater to the engineering and production needs of the some of the world's biggest AUTOCOMPanies. over the years has been engaged in promoting exports of engineering goods including auto parts. emission and performance standards. This is largely due to:  Proficiency in understanding technical drawings and being well conversant in all global AUTO standards: American. Climbing up the value chain The Indian AUTOCOMP industry has made a sustained shift to the global Tier 1 market for their products. Sona Koyo Steering Systems. Manufacturing and imports in this sector is free from licensing and approvals.5 per cent from the earlier 10 per cent. Today. with only 35 per cent of exports being sourced by Tier 1 OEMs. Among other initiatives that have been effected in 2006-07 are:  Reduction in the duty of raw material to 5-7.Motherson Sumi.  Finalization of the AUTO Mission Plan (AMP) 2006-2016 for making India a preferred destination for design and manufacture of automobile and AUTOCOMPs. In 2006.

639% Comps 5 .639%.5% 14% 4% 0. which is growing at a spanking rate of over 16 per cent. development and simulation Striking the growth chart. Item Import Duty CVD Additional Duty Educational Cess Total Duty AUTO 7. Besides the burgeoning demand from global auto majors. Import Duty: The Import Duty for this sector is 28.  Growing IT capability for design. Indian companies are:  increasing investments in production capacity  establishing partnerships in India and abroad  investing in or acquiring companies overseas  establishing greenfield manufacturing footprints overseas The road ahead Exciting times lie ahead for the Indian AUTOCOMP industry. driven by a rising consumer base and affordable loans. there is also the domestic car industry.69% 28.