Auto Component Exports See First Fall After 5 Years

The industry is also worried about rising imports. India is a net importer of these components and these grew 1.8% to $13.8 bn in 2015-16

Indian exports of automobile components declined in 2015-16, after five years of growth, down 3.7 per cent to $10.8 billion against $11.2 bn in FY15, when these grew 10 per cent.

Exports to Europe, the largest destination, declined six per cent to $3.9 bn. Shipments to markets in Asia declined three per cent to $2.7 bn, shows data from the Automotive Component Manufacturers Association (ACMA). Growth was seen in North America, where exports grew three per cent to $2.7 bn.

Europe accounted for 36 per cent of exports, followed by Asia and North America, each at 25 per cent. Those to Central America and North America increased by 30 per cent and three per cent, respectively, over 2014-15.

The key items were engine parts, transmission parts, brake systems and components, body parts, exhaust systems,  and turbochargers.

“Exports are slow as the global market is not growing. We expect domestic growth, with a good monsoon. With signs of recovery in the automobile market in the country and prospects of a better monsoon, the component sector is expected to witness growth in early double-digits this year,” said Arvind Balaji, president at ACMA and joint managing director of component manufacturer Lucas-TVS.

The industry is also worried about rising imports. India is a net importer of these components and theses grew 1.8 per cent to $13.8 bn in FY16. China is the leading exporter of components to India, no Chinese automobile company has a manufacturing base here. At $3.2 bn, China accounts for 23 per cent of component import. "Rising import is a matter of concern, though it shows that domestic consumption is growing," said Vinnie Mehta, director-general at the Association.  

"It is a challenge," said Balaji. "There (in China), the government supports exports and we are talking to our government to provide us a level playing field in terms of trade policy."

In FY16, the component industry invested an estimated Rs 2,700-4,000 crore, compared with Rs 2,000-2,800 crore in FY15. "The enhancement can be attributed to better business prospects, owing to improving market sentiment," said Mehta. The total turnover of the industry, including domestic sales, grew 1.3 per cent to $39 bn in FY16. Exports were a third of this.

Reference - http://www.business-standard.com/article/companies/auto-component-exports-see-first-fall-after-5-years-116061700367_1.html