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Made-in-india Auto Components On The Global Radar

Global automobile manufacturers are increasingly looking upon India as the hub of auto component manufacturing

. Thanks to Indias cost competitiveness in terms of labour and established manufacturing base.

The Indian auto component industry knows how to make hay while the sun shines. Backed by cheap labour and low-cost technology, made-in-india auto components are finding buyers from indian markets -Asian markets and even the global markets. Today made-in-India auto components have on its buyer list high-end automobile companies like Volkswagen, Toyota, General Motors, and Ford etc.

According to a report released by Automotive Component Manufacturers Association of India (ACMA), made-in-india auto components will touch US$40 billion by 2015-16. Investments in the industry are likely to touch US$20.9 billion by the same period.

Exports of auto components in 2002-07, is growing at a rate of 35 percent and had reportedly touched US$3.6 billion in 2007-08. By 2015-16, the exports are expected to reach US$20 billion-US$22 billion. Europe and North America are two of the many countries that are looking forward to buying made-in-india cheap auto components.

The onset of recession did have an effect on the industry; however, the industry is back on the growth path. The auto component industry from Kanpur, for instance, witnessed a three-fold growth in orders during January to March 2009.

Destination India

Global automobile manufacturers are increasingly looking upon India as the hub of auto component manufacturing. Thanks to Indias cost competitiveness in terms of labour and established manufacturing base.

Experts are not simply bragging and boasting about made-in-india auto components. Indian auto components, in fact have made a specific niche in the global automobile world. Take for example, luxury car makers like BMW is contemplating to sign a direct sourcing deal with local vendors this year. Even Skoda Auto India wants to cash in on the opportunity. The auto giant wishes to localize its small car Fabia, up to 50 percent, in the next two years. Mercedes Benz imports 10 percent of made-in-india auto components.

Foreign Investments

When it comes to casting and forging manufacturing cost, India has advantage over its western counter parts. Indian manufacturing cost is less by 25 to 30 percent. The phenomenal growth of the Indian automobile segment has inspired the Indian government to attract foreign investment worth US$5 billion in the next seven years, in an attempt to increase Indias share in the global auto component market, from the present 0.9 percent to 2.5 percent by 2015.

French tyre major, Michelin is planning to set up a manufacturing facility in Tamil Nadu by investing almost US$ 2.26 billion.

Bosch, despite recessionary trends seems committed to invest US$26.76 million to set up a manufacturing unit for electronic control units (EUC)

Swiss auto clamps maker, Oeitker Group, has invested US$ 12.58 million in the First Phase at its manufacturing plant.

Domestic Investments

The Indian auto components growth momentum has not only inspired global investors, but even the Indian domestic component companies are looking forward to pump in huge sums. For Instance, an auto component park is being launched near Hyderabad with an investment worth over US$409.30 million and it is being reported that almost 34 ancillary units have chipped in terms of investment. This development is in addition to the US$245.59 million Greenfield project being launched in close proximity to the park.

Hero Motors in collaboration with Austrian firm is planning to invest US$19.84 million for manufacturing of automotive transmissions in India.

Indian subsidiary of Swedish automotive component maker SKF is investing US$ 30 million in a new manufacturing plant coming up in Haridar.

Policy Initiatives

Some of the proactive initiatives initiated by the government to attract foreign investment in the industry include:

The industry has been delicensed

No restraints on imports of components.

Foreign equity upto 100 percent permitted

As per Automotive Mission Plan 2016 the sector will offer additional employment to 25 million people by 2016.

by: made-from-india.com
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