The Hindu Business Line : `Auto component exports have potential to grow to $25 b by 2015'

(From left) Dr Adarsh Kishore, Secretary, Ministry of Heavy Industries & Public Enterprises; Mr Jagdish Khattar, Managing Director, Maruti Udyog Ltd; and Mr K.V. Shetty, President, Automotive Component Manufacturers' Association, at the association's annual session in the Capital on Thursday. - Kamal Narang

New Delhi , Sept. 2

THE Indian auto component industry has the potential of achieving impressive landmarks over the next few years.

The industry could see about $20 billion-$25 billion in exports and $13 billion-$15 billion in domestic consumption and indirect exports by the year 2015, according to a Vision 2015 study for the Indian auto component industry, prepared by McKinsey & Co. The findings of this were revealed here on Thursday at the 44th Annual Session and National Conference of the Automotive Component Manufacturers Association of India (ACMA).

Speaking at the National Conference titled `Automotive component industry: Vision 2015,' Mr Ramesh Mangaleswaran, Principal, jointly with Mr Rajat Bhargava, Associate Principal, McKinsey & Co, revealed that, "India-based automotive component manufacturing has the potential to grow from $6.7 billion in 2004 to $33 billion-$40 billion by 2015. This potential growth could create 2.5-3 million additional direct and indirect jobs and provide a significant employment opportunity for the rural/small town population."

Mr K.V. Shetty, President, ACMA, said that the recent spate of global outsourcing in the Indian auto component industry showed that overseas buyers now looked at the sector for its high quality and low cost. However, he felt that global sourcing required that Indian auto component makers scale up their manufacturing capacities to precede procurement of new business. He pointed that the domestic industry has charted out investments of about Rs 1,000 crore-Rs 1,500 crore in the current year toward capacity expansion.

Mr Shetty observed that the sector would have to quickly transit from its "catching-up with technological improvement" mode to "designing for the future" mode. "Cosmetic R&D is no longer valid," he said. He urged the Government to ensure that this important sector were given a level playing field to withstand the competitive pressures of the free trade agreements and preferential trade agreements that had been signed or were about to be signed.

In the keynote address, Mr Jagdish Khattar, Managing Director, Maruti Udyog Ltd, and President, Society of Indian Automobile Manufacturers, highlighted the effectiveness of an "opportunity share" strategy versus a "market share" strategy.

Meanwhile, Mr Baba Kalyani, Chairman and Managing Director, Bharat Forge Ltd, made four key recommendations to the audience, namely: build large capacities of "brain power" within the organisation; put large emphasis on IT-based technology in manufacturing; look at engineering and product development either on your own or through other avenues; and provide for adequate training to improve marketing skills required to create delivery systems for global customers.

Mr Deep Kapuria, Chairman, Global Trade & India Brand Building, said, "For the automobile components industry to reach its potential, there is a need to align ourselves in all the three categories: government, company and association. All of them have to reflect the same passion to make India a manufacturing hub. We will have to overcome peculiar challenges such as raising capital, tapping the right skill sets and committed deployment of the strategies taken by the individual companies."