Auto component industry to invest $7 bn in next 5 years

Robust Growth Potential

• Industry spent $3.5-4 bn spent in the last 5 years
• It demonstrated a growth of 12.6% scaling a turnover of Rs 2.98L cr
• Its exports grew by 2.7% to $10.4 bn while imports grew by 3.6% to $10.6 bn

New Delhi: The auto component industry is looking to invest around $6.5 to 7 billion over the next five years on capacity expansion and technology upgradation, with the demand expected to remain robust over the period.

The industry, which recorded a 12.6 per cent year-on-year revenue growth in the first half (April-September) of the current fiscal at Rs 2.98 lakh crore, expects double digit sales growth to continue in the rest of the current fiscal and in the upcoming financial year as well. "The components industry continues to make investments for purposes of higher value-addition, technology upgradation, and localisation to stay relevant to both domestic and international customers," Automotive Component Manufacturers Association of India (ACMA) President Shradha Suri Marwah told reporters here. The industry is looking to invest $6.5-7 billion capex over the next five years as compared to $3.5-4 billion spent in the last five years, she added.

"Going forward, considering the festive season has gone well with significant sales across most segments of the vehicle industry, I am optimistic that the current fiscal year will witness another good performance from the auto components sector," Marwah noted. With vehicle sales across all segments reaching pre-pandemic levels and with mitigation of supply-side issues witnessed during the pandemic such as availability of semiconductors, high input raw-material costs and non-availability of containers, the auto components sector witnessed a steady growth in both domestic and the international markets in the first-half of FY2023-24, she said.

Elaborating further on the performance of the industry, ACMA Director General Vinnie Mehta said that with vehicle sales and exports displaying steady performance, the auto component industry demonstrated a growth of 12.6 per cent scaling a turnover of Rs 2.98 lakh crore ($36.1 billion) in the first half of FY 2023-24. Auto component supplies to all segments of the industry -- to OEMs, exports as also the aftermarket -- remained steadfast, he added. He noted that during the period under review, auto component exports grew by 2.7 per cent to $10.4 billion (Rs 85.87 lakh crore) while imports grew by 3.6 per cent to $10.6 billion (Rs 87.42 lakh crore). Mehta noted that Asia accounted for 63 per cent of imports, with China remaining the largest importing country, followed by Europe and North America, with 27 per cent and 9 per cent, respectively.