Overdrive!
Deep
Kapuria, MD, Hi-Tech, spoke to The Machinist on how the automotive sector
is propelling the Indian auto component industry to gain new ground
The
auto component industry is growing at a fast pace. What are the key
reasons for this high growth?
The main reason is the fast pace of the vehicle industry. The performance
of the component industry is directly dependent on the growth of the
vehicle industry. The high growth in the exports of components has also
contributed to the continuous overall growth in the component industry.
The overall growth in the vehicle industry during the first two quarters
of FY 2003-04 has been 14 per cent and the growth in the exports of
autocomponents has been 56 per cent.
What
will be the key drivers behind its future sustainability?
Sustainability
of this growth would depend on a number of factors, the chief one being
the growth in the vehicle industry. The growth in passenger cars, commercial
vehicles and other vehicles is directly proportionate to the growth
of the component industry. This would in turn depend upon the purchasing
power of the people and the spending on infrastructure and transport
development by the Government. Today, we are seeing a growth that is
being fuelled by these factors.
In
terms of exports of auto components, the growth drivers would be the
huge outsourcing potential and the shift of manufacturing from the high
cost locations to low cost countries like India and China. We expect
the exports to touch $1 billion by April 2004 and then grow to at least
$2.5 billion by 2010.
There
are a few examples of auto component companies going global. Do you
see that happening in a big way?
As the automotive industry is a global industry, automakers are free
to source their components from the most cost-effective supplier from
any country. What’s more, the entire auto-component industry at the
Tier 1 level is controlled by a handful of global companies who have
operations all over the world. For Indian companies to compete in such
an environment, they would have to develop a global footprint for themselves
in the long term. This is what we see happening today.
As
international trade liberalises, there would be increasing opportunities
for Indian companies to invest in other countries and strengthen their
presence in the global automotive supply chains. I see this trend increasing
and I am confident that we shall see many Indian autocomponent MNCs
emerging in the next five years.
Many
foreign players are likely to establish manufacturing hubs in India.
To what extent will this impact domestic players?
Most global players like Ford, General Motors, DaimlerChrysler, Toyota,
Hyundai and Fiat have their presence in the Indian market. Many 100
per cent subsidiaries of auto-component MNCs like Visteon and Delphi
also have significant presence in India. This has given a fillip to
the Indian component industry in terms of size, capacity and technology
inflow.
Auto
component manufacturers have indeed made a mark in terms of quality.
Where do you think Indian component manufacturers stand today on the
parameters of design and technology?
The
auto component industry is basically a ‘supplier’ industry. It shall
supply whatever the customer demands. In the past, no vehicles were
designed and developed in India and therefore there was no need for
developing the component industry. Indian component manufacturers
.........CONTD
