With most foreign auto companies looking forward to source automotive components from India, domestic vendors are scaling up production to meet the escalated demand In a recent development that augurs well for the domestic auto component industry, foreign auto majors are planning to source more components from India owing to cheap costs. Buoyed by the trend, most auto component suppliers are ramping up their production capacity to meet the demand of the foreign firms.
According to a survey conducted by Machinist360.com, a whopping 91% of the respondents feel that sourcing auto components by foreign firms will provide a fillip to the domestic auto component manufacturing industry, while only 9% feel otherwise.
 According to Sandeep Malhotra, director of Rotela Auto Components, a mid-sized manufacturer of automotive components in New Delhi, “Procuring automotive components from the country will bolster India’s share in the global auto market. The same will also ensure additional revenues for auto component suppliers. It will also spur competition in the segment, thereby leading to innovation.”
Low manufacturing costs making India a hot destination
Companies such as BMW (Germany), Nissan (Japan) and Jaguar (UK) are looking forward to source a bulk of their components from India. BMW that currently sources components such as gears, castings and assembly parts from India has exclusive plans to source more components in the next 2 years through its purchasing office in the country. Nissan Motors aims to source components worth US$40 million from India in the next 2 years.
In this context, an official from the Automotive Component Manufacturers’ Association of India (ACMA), who did not wish to be named, says, “Operational and manufacturing costs in India is much less as compared to Western countries. Sourcing auto components from India plays a crucial role for these companies to maintain healthy profit margins.” It is estimated that companies such as General Motors, Fiat, Volkswagen etc are sourcing components worth US$1 billion from India. According to ACMA, more than half of the turnover of the domestic auto industry is expected to come from exports in the next 6 years.
Arup Choudhury |
