Auto component industry growth to slow down to 8-10%


The Indian auto component sector grew by 15.7% in the fiscal 2011-12 posting a turnover of Rs 2,10,400 crore but the growth will moderate to 8-10% 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 (ACMA) said investments in the sector declined to around $1.6-1.9 billion in FY 12 as compared to $2-2.5 billion in FY 11 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% (in rupee terms) over the previous year," ACMA said in a statement.

"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%," 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, FTAs and infrastructure development need to be relooked for the overall growth of the auto component industry," he added.

ACMA said due to 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%. Europe accounted for 36% followed by Asia at 28% and North America at 23%, ACMA said.

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

Asia and Europe contributed to over 57% and over 35% 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.