Why this is important to Wisconsin businesses: India's automotive industry is on track to become the fourth-largest globally by 2020.
The Indian automobile industry has become well-established globally, and is expected to become the fourth-largest automobile market in the world by 2020, behind China, the U.S. and Japan. The revenue of the Indian auto component industry stood at $39 billion for FY 2015-16, registering growth of 9 percent, and is projected to reach $115 billion by 2020-21. The current total vehicle count in the country is estimated at 229 million.
India’s informal sector has more auto component manufacturing units than the organized sector does. However, the organized sector contributes 85 percent of revenues, with the remaining 15 percent contributed by companies in the unorganized sector.
The two-wheelers segment, with 79 percent market share, is the leader of the Indian automobile market, while the overall passenger vehicle segment has 14 percent market share. Three-wheelers and commercial vehicles have a market share of 4 percent and 3 percent respectively.
Engine parts form the largest segment, with a 31 percent share of the auto component industry, followed by drive transmission and steering parts, with 19 percent share. The body and chassis sector and the suspension and braking parts sector contribute 12 percent each, and other components account for 26 percent of auto component production in India. Some of the largest auto component players with engineering centers in India are Bosch, Bharat Forge, Cummins, Eaton, Pricol and Sundaram Clayton Limited, among others.
India’s exports of auto components were valued at $10.8 billion in FY 2015-16. The U.S. remained the major consumer of automotive components exported by India, accounting for around 24 percent of the overall automotive component exports, followed by Germany and Turkey, at 7 and 6 percent respectively.
India’s imports of automobile components increased by 9.3 percent in 2015-16, reaching $13.8 billion, up from $13.6 billion in 2014-15. China tops the list, accounting for 23 percent of total auto component imports to India, followed by Germany at 14 percent, South Korea at 11 percent, Japan at 11 percent and Thailand at 8 percent. The U.S. ranks sixth, contributing around 8 percent of India’s total auto components imports.
100 percent FDI is allowed under the automatic route in the auto components industry. It is estimated that the industry will need to attract investment of $30 to 40 billion over the next decade.
India’s auto component companies have started looking for new technologies to develop indigenous solutions to emissions, safety etc. India is also emerging as a sourcing hub for auto components, with global companies such as Ford, Fiat, General Motors and Suzuki setting up manufacturing facilities in the country.
Lower excise duties on specific parts of hybrid vehicles and policies such as the Automotive Mission Plan 2016-26, Faster Adoption and Manufacturing of Electric Hybrid Vehicles and NMEM 2020 are likely to boost the growth of the auto components industry in India.