China-plus-one strategy playing out pretty much in our favour: ACMA President

The industry has done fairly well. Revenue hasgrown from $56 billion to $70 billion. Our exports have remained at 30 per cent of that, at about $20 billion. We’ve seen good growth in the domestic as well as the export markets. Whilst we have been fearful of a recession in the US and are wary of the conflict in Europe, we’ve seen good growth in both markets, as well as Asia. In fact, the US grew about 8 per cent for us, Europe 3 per cent and Asia 4 per cent. So, we’ve seen good export growth and I think this is coming off on the back of the China-plus-one strategy that’s playing out pretty much in our favour. So, I’m hopeful that it will continue.

Our imports have been pretty much even in terms of all our exports. We’ve got a trade deficit of about $200 million, which is not that bad considering where we’ve come from in the past. Of course, we had a trade surplus last year. However, electronic components continue to be imported, and as we localise, we’ll see a benefit. We hope to continue localising in electronics and other parts and, therefore, reduce our dependence on imports. In terms of industry, of course, passenger vehicles have grown a lot.

Overall, we’re seeing numbers come back in the two-wheeler industry. Electrification in the two- as well as three-wheeler segment is playing out pretty well, and the numbers look much better than they were last year. So, we hope they’ll continue to grow and we’ll see a revival, similar to what we have seen across the rest of the industry. Passenger cars have done well, commercial vehicles have also increased. Tractors is held up. We’re hopeful that this will continue.

We’ve got a good hold in terms of what we’re supplying to the electric vehicles segment, specifically in the two and three-wheel industry, because we’ve been able to develop components, invest in technology and increase our investment in technologies and, therefore, we are well prepared to supply for the electrification of vehicles. In fact, when we looked at the executive committee of ACMA two years ago, 60 per cent of the members of the executive committee, which is a good representation of the automotive industry, said they were ready to supplyto EVs, and 40 per cent said they would be in a year. So I’m assuming everyone is ready to supply to EVs.

We’ve been on an acquisition spree for many years now. We started back in the mid-2000s. And, we hope that that continues because as we grow in size and as we require technology and the need to supply into global markets, we’re going to look at acquisition opportunities as an industry. The other opportunity that the industry will look at is in terms of start-ups or smaller companies that are technology-driven, and really look at how we can integrate the technology in the component industry. The component industry that is well-established, will play a big role in software integrating with hardware. So I think we’re also going to see a lot of those opportunities come our way. We’re going to see opportunities, of course, of the traditional Tier-I and Tier-II suppliers that have been the focus or the target thus far. And, I think we’re also going to see smaller companiesdriven purely by technology. So, it’s going to be a good mix.

The PLI policy is well-defined in terms of investment in future technologies. And, if you look at it from the component industry’s point of view, just investing in future technologies will bring a lot of benefits because we’re going to be able to supply into what is becoming the new automotive industry in terms of electrification, connectivity, telematics, autonomous. The industry is changing very rapidly, is disrupting very rapidly. And, we need to disrupt along with them. The component industry and the supply chain needs to disrupt along with the component industry. And, the PLI scheme has defined what we must be doing. There are 67 companies in the auto component industry that have been approved for the PLI scheme. We hope that this will bring more investment in technology and that’s really where we need to be and where private sector has to play a big role is investing in technology.

I can’t comment on OEMs and their plans. However, if you look at the component industry, we’re well-positioned and well-equipped to supply to EVs. We’re doing that in India with our local OEMs. We’re doing it in terms of exports. There are a lot of companies that are exporting to global OEMs and a lot of global OEMs have electric platforms. So, I don’t see why electrification will not grow very rapidly in the coming years and even with the local OEMs. There’s going to be a big move towards electrification. It’s already happening globally, and it’s going to catch up in India as well, with OEMs coming here and local OEMs as well, moving towards electrification.