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Parts makers expect 18% export growth

Automotive component manufacturers are buoyant about the growth of this sector and expect exports to touch $30 billion by 2020, up from $5.2 billion at present.

“Contrary to anticipations of a dip, there has been a growth in export of auto components,” said Mr Arvind Kapur, president, Automotive Components Manufacturers Association of India (ACMA), here today.

“Going by the global trends of auto industry, exports could grow by 18 per cent (compounded annual growth rate) by 2020 as against 11 per cent currently.” This, he added, included components for all vehicles, including luxury and off-road vehicles.

Original equipment manufacturers (OEMs) and Tier-I car companies account for 80 per cent of the exports while after-market sales, or replacement of parts in servicing of vehicles, account for the remaining 20 per cent, Mr Kapur said.

Asked about the fluctuating global market, particularly in the current economic scenario, the ACMA president said: “Because of the currency fluctuations, a lot of orders have been diverted from Brazil to us. Around 10-12 years back, we were getting into the process of exports. Today, with growing maturity in the market, consumers are respecting our quality, timely delivery, services and are increasingly depending on us for parts.”

There are, however, several challenges faced by this sector. Manufacturers, which are participating in a big way at the ongoing 11th Auto Expo in the capital, are concerned at the fluctuating currency exchange value and lack of support from the government.

“At a time when several players are emerging in the global scenario, there is a continuous price pressure and we are forced to cut our prices,” said Mr Ankit Rakheja, director, Dutta Industries, a steering and suspension component manufacturer. “China, for instance, is giving a lot of incentives to their manufacturers.”

He said the government had withdrawn duty drawback benefits given under the Duty Entitlement Passbook Scheme (DEPB), under which duties paid while importing raw material are refunded. Mr Rakheja claimed the sales of his company had dipped since October last year, despite the export benefits arising out of a depreciating currency.

Asked about the government incentives, Mr Kapur said it was only the additional compensation by way of increased DEPB that the government had given during the economic slowdown in 2008 that had been withdrawn.