AUTO PARTS MAKERS SELF-DRIVE PROFIT

Despite headwinds, auto component exports - which contribute around 30% to the total turnover of India's auto ancillary industry have remained steady.

- Karan Dhar

DURING 2023, passenger vehicle sales in India crossed the 4 million mark for the first time ever. This helped the country pull ahead of Japan once again to the world’s third-largest car market by volume. India is already the world’s largest two-wheeler, three-wheeler and tractor market. Demand for commercial vehicles remains robust too, thanks to the government’s infrastructure push.

But keeping this well-oiled automobile industry’s engines running are hundreds of auto parts manufacturers. To say that India’s auto component industry is resilient would be an understatement. In just four years, it has braved the pandemic, a prolonged semiconductor shortage, commodity price hikes due to the Russia-Ukraine war and sluggish global car sales that are yet to reclaim their pre-pandemic highs.

Despite headwinds, auto component exports — which contribute around 30% to the total turnover of India’s auto ancillary industry — have remained steady. What has worked in India’s favour is the China + 1 strategy of Western companies looking to decouple their supply chains by shifting away from China. “We haven’t seen investments being uprooted out of China and coming to India. That has not happened. But what’s played in our favour is huge traction of companies wanting to de-risk China and supply more out of India. So we have been able to keep exports steady despite challenges on the geopolitical front and recession in Europe, one of our largest markets,” says Vinnie Mehta, director general, Automotive Component Manufacturers Association of India (ACMA).

Cumulative revenues of the 48 auto and ancillary firms in The Next 500 list grew 25% to ₹1,07,139 crore in FY23, from ₹85,854 crore in FY22.