Financial Daily from THE HINDU group of publications
Monday, Feb 24, 2003
Financial Daily from THE HINDU group of publications Monday, Feb 24, 2003 |
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Industry & Economy
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Automobile Components Auto majors see India as parts sourcing hub Neha Kaushik
NEW DELHI, Feb 23 THE dynamics of the global marketplace is giving the Indian automotive component industry reason to smile. According to projections made by the Automotive Component Manufacturers' Association (ACMA), export of components is set to touch $1 billion by the year 2005. While companies operating out of India such as Ford, Yamaha, Toyota have already indicated that they plan to use the country as a component sourcing hub, even multinationals, which do not have operations in India, are presently in talks to source components. For example, industry sources reveal that while French automobile firm Renault is in talks with several component manufacturers for sourcing of components, trucks and buses, the manufacturing major Navistar International will be sending a delegation here next month to assess the component supplier market. Further, sources indicate that the Volkswagen delegation which visited India too had indicated that it intends to source components out of India, regardless of whether the company sets up a plant in the country or not. As a result of component sourcing, OEM (original equipment manufacturer) and tier-I exports are rapidly increasing their share in the total automotive component exports out of India. "Traditionally, the market has been dominated by exports for the after-market. The change in the composition of exports can be seen from the fact that in five years, from 1997 to 2002, the combined share of OEM and tier-I exports has grown from 20 per cent to 40 per cent", Mr Vishnu Mathur, Executive Director, ACMA said. However, it should be noted that the last few years have seen global tier-I suppliers such as MICO and Visteon emerging as major exporters of components from India. Indian cos seek to make footprint abroad: Several Indian automotive component companies are also exploring developing overseas markets to begin manufacturing of components. Currently, these developing nations constitute primarily of Iran, Uzbekistan, Egypt, and Tunisia. These countries have shown interest in getting technology and knowhow from Indian firms, says Mr Mathur. In view of the low volumes in their domestic market, these countries have not been able to attract technology from American and European companies, which in turn would have helped develop their own component industry. The fact that Indian companies have been able to adapt various technologies from across the globe makes them an attractive proposition. Another advantage for Indian companies to look at these markets could be the rising purchasing power and growing domestic demand there, which currently is being catered to primarily through imports. Tunisia is, however, an exception in this regard, but is an attractive location to set up a manufacturing base on virtue of its geographical position, which enables greater reach into the European markets.
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