On the back of over Rs 1 lakh crore in capacity building by automakers, the auto components industry is expected to almost double its capital expenditure to over Rs 50,000 crore in the next five years. The investment will go for capacity addition, as well as for technology upgrades and innovation.
The components industry has seen an investment of $3.5-4 billion in the last five years, and the industry is expected to spend between $6.5-$7 billion in the next five years, Automotive Component Manufacturers Association (ACMA) President Shradha Suri Marwah said today.
“The capital expenditure is now happening in areas of technology and innovation. There is a huge impetus for localisation. The industry is making in India, not just for India, but also for the rest of the world,” Marwah said.
The auto components industry clocked Rs 298,487 crore ($36.1 billion) in revenue during the first half of 2023-24 (April-September), representing a growth of 12.6 percent on the year. Component exports rose 8.7% year on year to Rs 85,870 crore, while imports grew 9.5% to Rs 87,425 crore.
India currently imports components related to engines, vehicle chassis, suspension and braking, transmission and steering. China continues to be the biggest source of imports. Exports from China accounted for 28% of imports during the first half of the financial year.
“China continues to be the source from where the maximum imports happen. The trend remains steady. Of late, because of so much focus on electric mobility, and considering the kind of ecosystem that China has been able to create for EVs, there is higher import from the perspective of batteries, and electronics,” said Vinnie Mehta, Director General, ACMA.
In a bid to boost localisation, the government introduced a production-linked incentive scheme for the automobile and auto component industry with an outlay of Rs 25,938 crore for manufacturing advanced automotive technology products. The scheme, which was launched in 2022-2023, will run till 2027-2028. The applicants under the scheme have proposed to invest Rs 67,690 crore, and Rs 10,755 crore have been already invested till June 23, 2023.