New Delhi; 8 August 2018
The Indian automotive component industry recorded a turnover of Rs 3.45 lakh crore ($ 51.2 billion) in 2017-18, registering a growth of 18.3 per cent over the previous year, according to Automotive Component Manufacturers Association of India (ACMA). The automotive component industry contributed 2.3 per cent to India’s GDP and has a share of 4 per cent in India’s exports.
The turnover figure represents the supply from auto component industry (ACMA members and non-members), on-road and off-road vehicle manufacturers and the aftermarket in India along with exports. The data also includes component supplies captive to the OEMs.
Vinnie Mehta, Director General, ACMA, commented, “The year gone by witnessed an upswing in the overall performance of the vehicle industry, despite it facing several regulatory challenges. The component industry, in tandem, posted an encouraging performance with significant growth of 18.3 percent over the previous fiscal, registering a turnover of Rs 345,635 crore ($ 51.2 billion). Further exports, grew by 23.9 per cent in FY 2017-18 to Rs 90,571 crore ($ 13.5 billion).”
Speaking about the need for government intervention to sustain long-term growth in the auto component industry, Nirmal Minda, President, ACMA, said, “The dynamics of the automotive market is undergoing a significant transformation as the industry strives to become compliant to various regulations related to emissions, safety and environment, including the transition from BS IV to BS VI. That apart, key trends such as vehicle connectivity, electrification of vehicles, shared mobility, Industry 4.0 among others are also redefining mobility. To support the changing customer needs and to stay relevant, the auto component sector needs to be encouraged with supportive government policies.”
Minda added, “One of the key demands of the industry has been a uniform 18 per cent GST rate across the auto component sector; currently 60 per cent of the auto components attract 18 per cent GST rate, while the rest 40 per cent, majority of which are two-wheelers and tractor components, attract 28 per cent. The latter high rate has led to flourishing grey operations in the aftermarket. A benign rate of 18 per cent will not only ensure better compliance, but will also ensure a larger tax base. Further, considering the significant technological changes that the industry is undergoing, there is a critical need for creating a fund to support indigenous R&D and technology creation in the component industry as also for technology acquisition from other parts of the world. Lastly, as we prepare for the introduction of electric mobility in the country, a well-defined, technology agnostic road-map with clear responsibilities of each stakeholder will go a long way in ensuring a smooth roll out as also leading to creation of a local supply base for the same.”