Auto component industry records highest trade surplus of $700 million in FY 2021-22

The industry had registered a trade deficit of $500 million in 2020-21.

“Auto component exports out of India grew strongly last fiscal, reiterating the ‘China Plus One’ strategy being implemented by MNCs,” said Sunjay Kapur, president, Automotive Component Manufacturers Association (ACMA).

He said the increased focus by the auto industry on deep-localisation and the Rs 44,038 crore production-linked incentive (PLI) schemes announced by the government for advanced chemistry cell batteries, auto and auto components makers will aid in developing India into an attractive alternative source of high-end auto components.

Auto component exports increased 43% to a record $19 billion in 2021-22. While shipments to North America went up 46%, those to Europe and Asia increased 40% and 39% respectively. North America is the largest overseas market for Indian parts makers, accounting for 32% of overall exports last fiscal.

Auto component imports amounted to $18.3 billion during the fiscal.

Enthused by the response Indian component manufacturers are receiving globally – most recently at a trade participation summit held alongside the Commonwealth Games in the UK earlier this month – industry stakeholders are looking at slashing imports of critical vehicle content and scaling up exports to corner a bigger share of the global parts business.

The automotive industry has identified 12 key components with localisation potential – including drive transmission, steering, engine, engine components, electricals, electronic components, iron and steel – to cut imports 15-20% (Rs 34,400 crore) over a period of five years. India imported auto components worth $ 18 billion last fiscal.

Industry executives said apart from ensuring a larger play in the global supply chain, the exercise will also help reduce dependence on China, which accounted for 30% of imports in 2021-22. “The dependence on China exists and cannot go away overnight. But we will have to continue to invest and look at collaborations to replace that,” said Kapur.

Overall, while the automotive value-chain faced significant disruptions over the past two years due to the pandemic, rapid recovery in the local market helped sales of passenger vehicles, commercial vehicles and tractors reach the pre-pandemic levels. The auto component industry posted a growth of 23% year-on-year to clock revenue of $56.5 billion in 2021-22.

“Of late, there has been some moderation in the supply-side issues in availability of semiconductors, input raw-material costs and availability of containers,” said Vinnie Mehta, director general, ACMA.

With a slew of launches lined up ahead of the upcoming festive season, the industry body expects the component industry to grow 15-20% this fiscal.

Mehta said poor offtake of two-wheelers, increase in cost of insurance, high inflation, excessive fuel cost and extreme logistics costs though remain to be of concern in the industry.