India’s Auto Component Industry Aiming for $100 Billion Exports
In a recent report by the Boston Consulting Group and the Auto Component Manufacturers Association of India (ACMA), the Indian auto components industry has set its sights on a lofty goal—reaching $100 billion in exports. This ambitious target is fueled by a strategic focus on the lucrative US and European markets, with a particular emphasis on 11 key product families.
Revving Up Exports: The Next Phase of Export Growth
The report, aptly named “Revving Up Exports: The Next Phase of Export Growth for the Auto Component Industry,” underscores the immense potential for India to not only sustain but significantly boost its export capabilities. By honing in on classical components and prioritizing specific product families, India could potentially add $40-60 billion in incremental exports to its already impressive numbers.
A Remarkable Turnaround in Exports
In the fiscal year 2024, India’s auto component exports surged to $21.2 billion, marking a remarkable turnaround from a $2.5 billion deficit in FY19 to a $300 million surplus. Shraddha Suri Marwah, President of ACMA, expressed pride in this achievement, emphasizing the positive trade balance and the surplus in auto-specific exports, which reached an impressive $0.5-1.5 billion. Looking ahead, Marwah is optimistic about sustaining this growth trajectory and reaching the ambitious $100 billion exports target.
Capitalizing on Emerging Opportunities
The report highlights the importance of capitalizing on emerging opportunities in the electric vehicle and electronic value chains through localization efforts. By focusing on components such as battery management systems, telematics units, instrument clusters, and ABS, India could potentially unlock an additional $15-20 billion in exports. This strategic shift aligns with global trends and positions India as a competitive player in the evolving automotive landscape.
Expanding Global Footprint
With global auto component trade valued at $1.2 trillion, the US and Europe emerge as key importers in the market. Despite India’s current export share in North America and Europe standing at approximately 4.5%, there is significant room for expansion. The report emphasizes the potential for India to deepen its relationships with global OEMs, who currently account for 20-30% of exports. Notably, India’s cost competitiveness, particularly in comparison to Germany, presents a compelling advantage for international buyers.
Navigating Geopolitical Shifts
As geopolitical dynamics continue to evolve, global OEMs are reevaluating their supply chains and manufacturing strategies. According to Vikram Janakiraman, Managing Director and Senior Partner at BCG, this presents a unique opportunity for India to position itself as a preferred destination for global OEMs and Tier 1 suppliers. By attracting key players to establish manufacturing bases in India, the domestic auto component industry can gain valuable insights into global requirements, integrate seamlessly into supply chains, and solidify India’s standing in the global market.
In conclusion, India’s auto component industry is poised for significant growth and transformation. With a clear focus on exports, strategic partnerships with global players, and a commitment to innovation, India is well-positioned to achieve its ambitious goal of $100 billion in exports. As the industry continues to evolve, India’s role as a key player in the global auto component market is set to expand, driving economic growth and creating new opportunities for stakeholders across the value chain.