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Auto Component Industry Expects $3 Billion Investment Every Year

By Motortrend India Staff   |   18 August,2010

The Indian auto component sector is expecting an investment of USD 3 billion every year for the next decade, mainly in capacity enhancement, to meet the growing demand, industry body ACMA has said. Automotive Component Manufacturers Association of India (ACMA) also said it is pressing the government for safeguard measures against cheap imports of finished car parts, primarily for those coming from China.

“In this year, the industry is expected to add USD 2 billion in capacity enhancement. We hope that this will be USD 3 billion on an annualised basis from next year for the next one decade,” said ACMA President Jayant Davar.

The industry is growing at a rapid pace of about 20 per cent and the momentum is expected to continue, he added. “This fiscal the component industry is expected to clock a total revenue of USD 25 billion,” Davar said. As per ACMA, the sector witnessed total sales of about USD 22 billion in 2009-10, out of which exports contributed around USD 3.8 billion.

Driven by record sales in passenger car and two-wheeler segments, the Indian automobile industry posted its best ever monthly sales in July, growing by 31.50 per cent at 12,37,461 units compared to 9,41,070 new cars sold in July 2009.

“We are currently discussing with vehicle makers for re- negotiating our price. The increase could range 3-20 per cent depending upon the product,” he added. He said the contracts were signed while the market and pricing scenario were completely different, and these are usually very long-term agreements. “Some contracts may even stretch up to for 25 years.”

ACMA Vice President Srivats Ram said the employees wage bills have also increased by about 15 per cent in the last one year, putting an additional pressure on the firms. “While adding the new capacity, there is still a level of scepticism, whether this growth is sustainable or not in the long term,” he added.

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