Manufacturing base and cost advantages to make India a leader in the auto component market
India's share in the global automobile component market is comparatively small. Yet, India's emerging manufacturing base and cost advantages place it aptly for a prospective market leader over the next few years," the report said."India's share in the global automobile component market is comparatively small. Yet, India's emerging manufacturing base and cost advantages place it aptly for a prospective market leader over the next few years," the report said.
According to the report, India's auto component exports have increased from USD 7.4 billion in Financial Year 2021 (FY21) to USD 12.8 billion in FY24.
Of special mention here is the fact that from FY21 onwards, India experienced a 73 per cent increase in exports, thus capturing India's post-pandemic recovery and growing international demand for auto parts.
On the export side, India's exports are dominated to a large extent by Drive Transmission Systems (DTS), Engine Components, and Electrical and Electronics components, which collectively contribute to 53 per cent of India's overall auto component export share.
The demand for superior automotive parts, particularly engine and transmission systems, speaks well of India's ability, augmented by the realization that much of what India manufactures goes into automobiles produced by overseas companies in Europe.
Geographic proximity to Africa and Southeast Asia also gives India a chance to expand its export share further via such emerging markets, as demand for auto components is likely to increase as automobile sales and production increase in these nations, the NITI Aayog added in the report.
In the same way, on the import side, India has seen its auto component imports grow by 80 per cent, from USD 6.7 billion in FY21 to USD 12.1 billion in FY24, led by engine parts and body/chassis/Body-in-White (BIW).
China is India's biggest auto parts supplier, accounting for nearly 23 per cent of India's imports, the NITI Aayog report further stated.
India's increasing significance in the global auto component industry is supported by a robust manufacturing ecosystem, low-cost competitiveness, and increasing volumes of exports. With exports seeing a remarkable 73% jump since FY21 and a strategic emphasis on high-demand components such as drive transmission systems and engine components, the nation is well-positioned to establish itself as a global powerhouse. In addition, India's geographical advantage and deepening integration with international supply chains provide additional opportunities for further expansion in emerging markets. As local capabilities advance and global demand expands, India's path to market leadership in automotive components not only appears possible but more authentic.
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