Indian Auto Component Industry Case Study

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The Indian auto-components industry can be broadly classified into the organised and unorganised sectors. The organised sector caters to the original equipment manufacturers (OEMs) and consists of high-value precision instruments while the unorganised sector comprises low-valued products and caters mostly to the aftermarket category. Majority of Indian auto component exports are to countries in Europe, which account for 35 per cent followed by countries in North America with 26 per cent. The export of auto components showed a great deal of improvement registering a growth of 16.7 per cent to Rs 61,487 crore (US$ 10.04 billion) in 2013-14 from Rs 52,690 crore (US$ 8.61 billion) in 2012-13. Also, with the automotive sector being a key driver …show more content…

Under the scheme, excise duties have been reduced for the following segments. For small cars, motorcycle, scooters and commercial vehicles – duty has been reduced from 12 per cent to 8 per cent. For mid-sized cars – duty has been reduced from 24 per cent to 20 per cent. For large cars – duty has been reduced from 27 per cent to 24 per cent. Road Ahead According to ACMA, the Indian auto components industry is likely to grow to US$ 150 billion by 2020 with domestic market share of about US$ 85 billion. The Indian auto components industry is well poised to achieve strong growth in the coming years owing to rising domestic demand in the OEM market. Also, the decline in raw material cost, such as decrease in cost of rubber, will help in improving the operating margins and consequently aid in increasing the exports from the auto components sector in India. Investments Since 2000, the auto component industry has recorded an investment level of Rs 18 bn and has attracted US$ 530 mn in terms of foreign direct investment. Investments in the sector have been growing at 14% per year. In 2005-06, investments touched US$ 4.4 bn, and are expected to grow significantly in …show more content…

• Government support: Indian government has also put Auto among its priorities with 2012 target to become 10% of our GDP. • Indian Automotive Industry is following global accepted quality measures at a lower cost. This makes it a perfect destination for production-outsourcing of automobiles. • The availability large talent pool at cheap prices. • Availability of cheap R&D; 4 IITs be deemed as centres of excellence for automobile research and access to latest technology. WEAKNESS The biggest and probably the only weakness of Indian automobile Industry is its slow growth in Research and Development most companies (barring TATA and M&M) do not have adequate spending on R&D in comparison to their turnover. Maruti for instance is completely dependent upon Suzuki for any new technology all of the successful cars sold by it were developed by Suzuki; Swift, A-Star (which replaced alto in other markets as New Alto), SX4, Ritz etc. This weakness will soon become history as Indian companies are catching fast in R&D and are showing strong signs of success e.g.: M&M Scorpio Hybrid, TATA

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