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Fresh opportunity is knocking at the doors as a consequence of the US-China trade war, and the Indian auto components industry is gearing up for more business.
The Automotive Components Manufacturers Association of India has identified “49 tariff lines” (products) as having the potential to absorb the increased American business coming India’s way, the President of the Association, Ram Venkataramani, told BusinessLine .
The high-potential products include rubber tubes, forgings, gaskets, seals, brake linings, pads and other friction material, safety glass, fuel pumps, fuel injection systems, air filters, bearings and small engines (50 cc to 250 cc capacity) and DC motors.
“Some of the OEMs have started interacting with our members,” Venkataramani said.
Auto components manufacturers supply parts to vehicle manufacturers, the ‘after-sales market’ and to the overseas customers. In 2017-18, the value of products sold by the industry was ₹3.45 lakh crore ($51.2 billion), which was 18.3 per cent higher than in the previous year. This included exports of ₹90,571 crore ($13.5 billion). But it is a net importer; it imported stuff worth ₹ 1.06 lakh crore ($15.1 billion) in 2017-18.
The US industry exports the most — $3 billion, or 23 per cent — though, the European Union countries as a block take 34 per cent of the exports. Venkataramani, who is also the Director of India Pistons Ltd, sees this number growing, also because China has been clamping down on polluting industries such as forgings and foundries, and the US buyers are turning towards India.
“The US is a big market, perhaps investments will have to be made in creating capacities. But the industry will not be averse to making investments in capacity creation if there is a long-term view of business opportunities,” said Venkataramani.
In the auto components business, unlike in other industries such as leather, OEMs do not easily switch suppliers as each component takes six months to two years for validation. And now, with product recall concerns, vehicle manufacturers have become more persnickety.
Venkataramani said the industry’s only demand of the Indian government is to help it seize the upcoming US opportunities — except for the continuation of the ‘Merchandise Exports from India scheme (MIES),’ which gives exporters an incentive to certain goods exported to certain markets, based on the value of the exports.
He wants the Government to defend the market against dumping by the Chinese who may dump their products in India to offset the loss of the US business.
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