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Rediff.com  » Business » Auto component growth to slow down to 8-10%

Auto component growth to slow down to 8-10%

October 11, 2012 14:26 IST

CarsThe Indian auto component sector grew by 15.7 per cent in the fiscal 2011-12 posting a turnover of Rs 2,10,400 crore (Rs 2,104 billion) but the growth will moderate to 8-10 per cent in the ongoing fiscal, according to industry body ACMA.

In its 'Industry Performance Review' for the fiscal 2011-12, Automotive Component Manufacturers Association of India said investments in the sector declined to about $1.6-1.9 billion in FY12 as compared to $2-2.5 billion in FY11 due to moderation in vehicle sales and depressed market sentiments.

"The turnover of the auto component industry stood at Rs 2,10,400 crore ($43.4 billion) for the period April 2011 to March 2012, registering a growth of 15.7 percent (in rupee terms) over the previous year," ACMA said.

The performance of the auto component industry was impacted by moderation of vehicle sales in India in 2011-12.

"While the uncertainty in the domestic market continues, ACMA is optimistic that the medium and long-term prospects of the component industry are intact.

"However, in the current fiscal 2012-13, the industry is expected to grow in the range of 8-10 per cent," it added.

Commenting on the findings of the review, ACMA President Surinder Kanwar said: "Ambiguity in the fuel price regime, high cost of capital, high interest rates and slowing down of investment in infrastructure is adversely impacting the growth of the automotive industry".

Stating that the auto component industry is confident of achieving the target of $115 billion by 2020, ACMA vice president, Harish Lakshman urged the government to provide long-term stable policies and export incentives.

"The government policies pertaining to tax regimes, foreign trade agreements and infrastructure development need to be relooked for the overall growth of the auto component industry," he added.

ACMA said because of moderation in vehicle sales and depressed market sentiments, the investment in 2011-12 declined compared to the previous year.

Capex in 2010-11 stood at around $2-2.5 billion.

During 2011-12, exports of auto components grew to $6.9 billion from $5.2 billion in 2010-11, a jump of 32.7 per cent.

Europe accounted for 36 per cent followed by Asia at 28 per cent and North America at 23 per cent, ACMA said.

Imports of auto components also grew by 25 per cent to $10.6 billion in 2011-12 from $8.5 billion in 2010-11, the industry body said, adding almost 85 per cent of the imports were accounted for by the original equipment manufacturers and the rest 15 per cent by the aftermarket.

Asia and Europe contributed to over 57 per cent and over 35 per cent of the imports respectively.

The quantum of imports has also increased due to several FTAs and other trade agreements signed by the government, ACMA said.

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